This was added on 16th dec 2015 at the v1.058 update.
Alteration eliminates the "luck factor" that is present with Re-enchant, as the Player may decide which specific Rune he/she wants, instead of getting random ones. Important to note, when selecting rune you select the one you wish to change. Also it's not simply choose the stat you desire. There is still a random luck factor but it's better chance than re-enchantment. As such, Alteration is significantly more expensive than Re-enchant and uses Refined Essence rather than Magical Essence .
Alteration allows you to selectively re-roll an items enchantments when you already have a Major or Minor rune you like.
You cannot get the same rune already on there.
The pricing of Alteration can be calcuated with the formula:
Alteration Cost = (ItemRarity) * (50), where ItemRarity is a value from 1-8, with Legendary/Unreal being 8.