The Government Initiates the Normalization of the Wholesale Electricity Market: Free Competition and Private Contracting Return

The Secretariat of Energy has approved Resolution 400/2025, which begins a deep reconfiguration of the Wholesale Electricity Market (MEM).

With the publication of Resolution 400/2025, the Secretariat of Energy took a decisive step in the process of normalizing the Wholesale Electricity Market (MEM). The measure, which enters into force on November 1, 2025, does not create a new regime but effectively reasserts the original principles of Law 24.065, the framework that since the nineties defined a competitive electricity market with free access and contracting between private parties.

For more than a decade, this scheme was virtually suspended: the State, through CAMMESA, concentrated the purchase of fuels, price setting, and the administration of payments to generators. With this resolution, the Government seeks to reverse that model of intervention and return to a market based on economic signals and competition.

The text of the resolution formally approves the document titled "Rules for the Normalization of the MEM and its Progressive Adaptation," identified as Annex I, which functions as the operational manual for the new market. It establishes how energy will be dispatched, how demand will be categorized, what roles each type of generation will have, and how prices and remunerations will be calculated throughout the transition, which will extend until 2029.

The starting point is a reorganization of the system's actors. Demand is divided into Large Distribution Users (GUDI) — with consumption exceeding 300 kW — and Seasonalized Demand, which groups residential and smaller commercial users. The former will be able to freely contract their supply; the latter will continue to receive energy from Assigned Generation, which includes power plants with existing contracts (Renovar, FONINVEMEM, GENREN, Res. 220/07, among others), in addition to national hydroelectric, nuclear, and binational plants.

In turn, a Spot Generation category is defined, made up of plants that do not have contracts and will compete in the daily market with prices determined by the system's marginal costs. Starting in 2025, a New Generation category will also be recognized, comprising plants enabled under the new rules and entering directly with full exposure to the market.

One of the most relevant changes introduced by the annex is the progressive liberation of fuel management. Until now, CAMMESA concentrated the purchase of natural gas and liquid fuels for thermal power plants, also assuming the economic risk. The new scheme begins to reverse that centralization: generators will be able — and gradually must — manage their own supplies.

During the transition stage, they can continue to access the "GN Acuerdo" (Agreement Gas), which centralizes the volumes of the Plan Gas and LNG imports, but this regime will be gradually reduced. According to the fixed schedule, in 2026 plants without their own management will receive only 80% of the corresponding remuneration, in 2027 it will drop to 40%, and from 2028 they will cease to receive it. As of January 1, 2029, each generator must independently supply its own fuel.

The new pricing system also marks a substantial change. Energy will be valued according to an hourly marginal cost, which combines the cost of the last machine dispatched with that of the next megawatt to be injected. This formula will be adjusted in stages: during 2025 and 2026, the calculation will be entirely on the operated cost; in 2027, it will incorporate 10% of the next MW's cost; and from 2028, that component will represent 20%. In this way, the final price will begin to reflect the economic value of energy more realistically at every moment of the day and system.

Regarding generation remuneration, the annex establishes that units operating in the spot market will receive income based on their marginal cost and an "adapted marginal rent," a new formula that seeks to reintroduce competition without causing sharp price jumps. To this end, the Adapted Rent Factor (FRA) is created, which defines what part of that rent each generator can capture according to its level of exposure to the market. In 2025, the FRA will be 0.15 and will gradually increase to 0.35 in 2028. New plants, enabled under the new scheme, enter directly with an FRA equal to 1.

The annex also introduces mechanisms to sustain system reliability during the transition. The Base Reliability Reserve Service (SRC Base) is created, which will recognize $1,000 per megawatt-month available to existing thermal power plants, and an Additional SRC, designed for new investments — whether thermal, hydro, nuclear, or storage — with variable remunerations based on their impact on system stability. Both mechanisms seek to ensure installed capacity while the market adjusts to free competition.

On the demand side, the rules establish that distributors must cover at least 75% of their seasonalized demand through term contracts, to reduce exposure to the spot price and guarantee predictability. In parallel, the operation of the Term Market (MAT) is made more flexible: during the first six months of application, agents can submit contracts up to five days before the start of each month, as an adaptation measure. The creation of a Capacity Market (MP) is also planned, where firm reserves can be contracted to complement the energy market.

Taken together, the resolution and its annex form a regulatory framework that does not alter Law 24.065, but reasserts it in practice. The law, sanctioned in 1992, already established a competitive market with prices determined by supply and demand, although for years that architecture was overshadowed by state intervention and cross-subsidies. What Resolution 400/2025 does is restore operability to that legal framework, adapting it to current conditions and defining a technical roadmap to return to a system of price signals, efficiency, and competition.

The implementation will be gradual and will require careful coordination among the State, CAMMESA, and market agents. But the direction is clear: by 2029, the Wholesale Electricity Market should once again operate under the rules that originated its creation, with generators and distributors contracting freely, transparent prices, and an operator fulfilling a technical, not financial, role.