Texas and PJM Shift Power Rules Amid AI Demand

Regulatory changes in Texas and the mid-Atlantic are impacting the profitability of existing power plant owners as regional grids struggle to meet AI-driven data center demand. In Texas, Governor Greg Abbott ordered a halt on fast-tracking data center grid connections to conduct a comprehensive audit. This move may delay power price increases for incumbents such as Vistra Corp and NRG Energy, both of which have seen stock declines of 10% and 25% year to date, respectively.

In the mid-Atlantic, PJM Interconnection is implementing new procurement measures and facilitating direct contracts between data centers and power providers. These actions follow a capacity auction that failed to attract sufficient supply for 2028, leaving a 6.8-gigawatt shortfall. While these shifts may lower future capacity prices for existing generators, the industry continues to face volatility; Constellation Energy stock has declined 21% year to date.

Constellation Energy CEO Joe Dominguez argues that the data center build-out must rely heavily on existing generation to avoid the delays inherent in constructing new plants. He noted that the economy cannot be built if the outcome requires waiting for new power plants before connecting data centers.