Following the publication of Decree-law n.º 240/2004, of December 27, the EDP Group signed on January 27, 2005 the agreements for the early termination of the power purchase agreements (PPA's) of EDP’s binding electricity power plants. The referred Decree-Law established that in order to maintain the contractual equilibrium of the PPAs, the owners of such agreements, which include a significant portion of EDP's generation capacity in Portugal, have the right to receive a compensation for the early termination of those agreements (CMEC). The effects of the termination of these agreements depended on the verification of set of conditions, which included the launch of the spot electricity market. The changes in the mentioned legislation envisaged the creation of an Iberian Electricity Market (MIBEL), which came into effect on July 1, 2007.

On February 16, 2007, the Portuguese Government confirmed its decision to early terminate the PPAs and implement the CMEC's mechanism, defining the rules to calculate the compensations due to the power generators for such early termination, and an adjustment to the reference market price of electricity used to calculate the initial amount of the compensation (CMEC) was considered. On June 15, 2007, EDP and REN agreed on the early termination of the PPAs, with effect as of July 1, 2007. The new CMEC regulation preserved the value of the PPAs and set the amount of the compensation at 833 million euros, which can be subject to securitization.

It was also established that EDP would pay 759 million euros for the use of hydro public domain, securing the right to operate 26 hydroelectric plants with a capacity of 4,094 MW, under free market conditions for an average period of over 26 years.

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REN - Rede Eléctrica Nacional