Contacted by Valor, Âmbar declined to comment. CPFL said it does not comment on market speculation. Equatorial had not responded by the time this edition closed. For market sources, declaring forfeiture is seen as a more lengthy route, while a change of operator could be a simpler solution. The companies are eyeing what is considered one of the country’s most complex concessions, characterized by high population density and strong cash flow generation. Enel São Paulo serves 24 municipalities in the metropolitan region, covering about 8.5 million properties, including the city of São Paulo, and holds a contract running through 2028. It is the largest power distribution concession in Latin America.

Last week, more than 2.2 million properties in the metropolitan area were left without electricity after an extratropical cyclone brought winds of nearly 100 km/h. It is the third consecutive year in which extreme weather events disrupted service and triggered criticism over delays in restoring power.

In a statement, Enel said it has fully complied with all regulatory indicators and delivered “consistent improvements” across all service quality metrics, “as evidenced by inspections recently conducted by the regulator.” The company also said that climate change has made Greater São Paulo increasingly exposed to extreme weather events.

“This measure requires a structured plan coordinated with public authorities, defining the most appropriate modalities for adequate compensation of this investment. The company is willing to make these investments as part of a strategy shared with all involved institutions,” the statement reads.

Enel added that it reaffirms its confidence in Brazil’s legal and regulatory framework to ensure security and stability for investors with long-term commitments in the country.

Âmbar has financial capacity and has recently taken on complex assets, such as the Amazonas Energia and Roraima Energia distribution utilities, as well as generation projects. Its most recent acquisitions include a minority stake in Eletronuclear and the Norte Fluminense gas-fired power plant from France’s EDF. On the other hand, the company lacks a significant track record in power distribution in large urban centers, which could weigh on a regulatory review.

Equatorial Energia is another potential candidate. The group is recognized for strong operational expertise in distribution and a track record of turning around troubled concessions. Holder of concessions in northern and northeastern states, Equatorial is also a shareholder in the São Paulo water utility Sabesp, which could, in theory, create synergies between services, according to people familiar with the matter. However, the company is currently highly leveraged due to its recent acquisition of a stake in Sabesp as a primary shareholder, which could constrain its financial capacity, according the sources. Third-quarter 2025 financial statements indicate leverage of 3.3 times.

CPFL Energia is seen by many as the most obvious candidate in a potential reshuffle. The company already operates in São Paulo state, has an established operating structure, low leverage, and financial backing from the owner, the Chinese company State Grid. CPFL has also shown historical interest in Enel assets, having previously attempted to acquire Enel Ceará (formerly Coelce).

Specialists interviewed by Valor caution, however, that it is too early to predict an outcome for Enel, which has made significant investments in the grid in recent years and is unlikely to relinquish the concession easily. Some see the possibility of litigation if forfeiture proceeds, especially if the utility’s quality indicators or economic-financial balance remain within the limits set by the Brazilian Electricity Regulatory Agency (ANEEL).

Forfeiture occurs when a distributor fails to comply with obligations established by the regulator in the concession contract. In the case of power distributors, the measure can generally be applied when service quality indicators that track power outages exceed ANEEL’s limits. The main metrics are duration (DEC) and frequency (FEC) of power outages. Financial issues that could impair service provision can also trigger forfeiture.

On Wednesday (17), Mines and Energy Minister Alexandre Silveira formally requested that ANEEL initiate the process to declare Enel’s São Paulo concession forfeited—the first step toward terminating the contract.

The agency said its inspection unit will assess the recurrence of service failures related to the December 10 blackout. The company is already being monitored by the regulator due to outages in October 2024, also caused by storms.