On October 21, 2025, the Secretary of Energy published the Resolution 400/2025, approving the “Rules for the Normalization of the Wholesale Electricity Market and its Progressive Adaptation” (the “Rules”).
This milestone represents the first comprehensive regulatory update for the electricity market in nearly 25 years, aiming to restore competitive operation, reactivate the Corporate PPA Market (“MAT”), liberalize fuel management for thermal generation, and enable electricity exchanges by private parties with neighboring countries. This regulatory framework is aligned with the purpose of Law 24,065, Decree 450/2025 (see our comments on this regulation here) based on the mandate contained in Article 162 of Law 27,742 “Foundations Law” (see our comments here), considering the Resolution 21/25 of the Secretary of Energy (see our comments here) and the guidelines released by Compañía Administradora del Mercado Mayorista Eléctrico S.A. (“CAMMESA”) on January 29, 2025 (see our comments here).
The Rules aim to ensure the operational continuity and growth of the electricity system, as well as to establish: (i) a price signal system for electricity demand and (ii) a compensation system for electricity supply based on marginal costs, to enable the contracting of energy and capacity in the MAT.
Below, we detail the most relevant aspects of the Rules:
1. Demand Segmentation and Assigned Generation
1.1. Demand Segmentation
The Rules separate demand into three main categories:
- Residential Demand: Receives first priority for Assigned Generation -as defined below- and is covered by regulated seasonal prices.
- Non-Residential Demand: Includes the demand not categorized as Large Users of Distributors (GUDI) or as Residential Demand and it receives second priority for Assigned Generation; if Assigned Generation is insufficient, distributors must procure its supply in the spot market or through MAT contracts.
1.2. Assigned Generation
Assigned Generation includes:
- Thermal and renewable plants under WEM contracts.
- National hydroelectric plants (excluding provincial hydro).
- Binational hydroelectric (Yacyretá, Salto Grande).
- Nuclear plants (NASA).
- Centralized imports managed by CAMMESA.
The compensation for Assigned Generation follows contract terms until expiry or its fixed in accordance with the rules that the Secretary of Energy issues. After expiration of concessions or contracts, generators may commercialize their energy in the spot market and MAT.
Distributors must cover at least 75% of their demand through MAT contracts in the medium and long term, reducing exposure to spot price volatility.
2. Fuel Management
2.1. Transition and Obligations
- Transition until 2029: Full self-management of fuels by generators becomes mandatory from January 2029.
- Natural has Management: During the transition, gas supply is prioritized under the Plan Gas (until 2028), with CAMMESA as last-resort generators. Generators may choose for self-managed gas or use CAMMESA’s agreements.
- Alternative Fuels: Generators are responsible for sourcing and costs, based on CAMMESA’s published reference prices.
2.2. Cost Recovery and Compliance
- Generators with self-management fuel may freely declare their Variable Cost Production (CVP) for each fuel, on a fortnightly basis.
- Generators without self-management of fuel (those relying on CAMMESA for fuel) cannot participate in the MAT and do not receive marginal rents. They will only receive a remuneration for capacity when required for dispatch, and a capacity availability payment when the equipment is available but not dispatched.
3. Marginal Cost and Spot Market
3.1. Marginal Hourly Cost (CMgh)
CMgh is calculated as a mix of the operated marginal cost (CMOh) and the cost of the next MW to be dispatched (CMph), gradually shifting to include more market signals by 2028 (80% operated, 20% next MW). The cost of unsupplied energy (CENS) is also considered and updated based on system restrictions.
3.2. Spot Generation Remuneration
- Thermal: Paid based on declared CVP plus an adapted marginal rent (RMA), with a transition factor (FRA) increasing from 0.15 to 0.35 by 2028. For new plants (commercial operation date as of 2025) the FRA shall be equivalent to 1 and RMA shall be full; and for existing plants (commercial operation date prior to 2025) the RMA shall have minimum values (equivalent to 2 for CVP < 60 and equivalent to 7 for CVP ≥ 60).
- Renewable: Existing plants (commercial operation date prior to 2025) shall receive a minimum RMA of USD 32/MWh; and new plants (commercial operation date as of 2025) shall have no minimum or maximum RMA and a FRA equivalent to 1.
- Hydro: Existing plants (commercial operation date prior to 2025) shall receive a minimum RMA of USD 22/MWh; and new plants (commercial operation date as of 2025) shall have no minimum or maximum RMA and a FRA equivalent to 1.
- Capacity Availability Payments: USD 12/MW with technology-specific multipliers.
Penalties for non-compliance with fuel declarations (Deliver or Pay, DOP) are set at 70% of the declared value for the volume not supplied, with exceptions for justified causes.
3.3. Spot Demand Pricing
Spot prices for energy and capacity are calculated by time bands (peak, off-peak, valley) and must at least cover the average system cost. A Factor of Marginal Adapted Spot (FSA) is introduced to gradually increase the weight of marginal cost signals in spot prices.
3.4. Seasonal Prices
Seasonal prices for residential and non-residential demand are calculated based on assigned generation costs and spot market costs for any shortfall. Large users (GUDI) are assigned with spot market costs and can contract directly or through distributors.
4. MAT
4.1. MAT Energy
A MAT Energy will be implemented to enable the contracting of variable WEM costs associated with the operation and maintenance of fuels and renewable energies through contracts for the supply of energy, both for distributors and large users. Existing thermal and hydro generation (commercial operation date prior to 2025) will be able to contract up to 20% of its production with large users, rest with distributors; as of 2030 they will be able to contract with any demand; new plants have no restrictions.
4.2. MAT Capacity
MAT Capacity allows contracting firm capacity, with coverage evaluated hourly. Hydro generation shall cover its contracts with 70% of the available hourly capacity; renewables cannot offer capacity contracts; nuclear generation can participate under specific conditions set by the Secretary of Energy; and storage facilities shall cover its contracts with the actual hourly storage capacity available when is equal to or greater than 4 hours.
4.3. Contract Terms and Functioning
Contracts are flexible, with priorities and allocation defined by the parties. Generators and demand must report contract coverage and priorities each season. Settlement formulas ensure that contracted energy and capacity on the MAT are properly deducted from spot market settlements.
5. Reliability Services and Market Opening
5.1. Reliability Reserve (Base and Additional)
- Base Reserve: USD 1,000/MW/month for existing thermal generation (prior to 2025). This charge shall be covered by all market demand. Excludes plants under active supply contracts, ENARSA, and certain cycle combined plants.
- Additional Reserve: USD 9,000/MW/month for new hydro/thermal/storage (as of 2025), for up to 10 years, subject to approval and system needs.
5.2. Market Opening
The Rules enable private energy imports/exports and assign local dispatch costs to the relevant district. These agreements shall be subject to the economic operation and minimum cost of the WEM.
6. Additional Provisions
- Currency Reference: All payments and contracts used the official wholesale USD exchange rate.
- Service and Transport Charges: Costs are allocated proportionally to monthly energy demand.
- Short-Term Reserve Services: The system will evaluate and adapt reserve services as needed for operational reliability.
- Jurisdictional Cost Assignment: Costs for local forced dispatch are assigned to the relevant district.
- Expansion and Planning: CAMMESA must evaluate and recommend new energy and capacity additions annually. The Secretary of Energy may organize tenders for medium-term supply, with payment guarantees for distributors under certain conditions.
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For further information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone, Milagros Piñeiro, Macarena Becerra, María Paz Albar Díaz, Rocío Valdez, Victoria Barrueco, Sol Villegas Leiva, and/or Manuel Crespi.