The Power Trade Meets the Ballot

NEW YORK, Nov. 4 — SharesShares of three power generators and two makers of power equipment rose on Election Day and fell hard the day after. On Wednesday Vistra closed down 13.83 percent, at $120.29, and Vertiv 12.89 percent, at $205.55. GE Vernova fell 9.30 percent, Talen Energy 8.54 percent and Constellation Energy 6.71 percent, on a day the S&P 500 rose 1.58 percent.

All five had gained on Tuesday, Nov. 3, from 2.39 percent for Constellation to 7.29 percent for Talen.Into the VoteFrom Friday’s close to Tuesday’s, all five rose: GE Vernova 7.03 percent, Talen 4.13 percent, Vertiv 1.49 percent, Vistra 0.88 percent and Constellation 0.39 percent. Measured from the close on Friday, Oct. 30, the week left Vistra down 13.07 percent and Vertiv down 11.59 percent, while GE Vernova, the strongest of the five, was down 2.92 percent.

A day’s prices are not a verdict, and they do not say why they moved. But Wednesday brought new doubts about two things the five have a stake in: how many data centers get built, and what customers pay to reserve generating capacity. One came from the ballot box, the other from a utility’s complaint to federal regulators.

The Demand

Democratic wins at the state and local level were “likely to lead to short-term data center moratoria, potentially affecting about 45% of planned US data center capacity expansion,” Goldman Sachs economists wrote, according to NBC News. At the federal level, they wrote, the outcome was “less likely to change the outlook for data center and AI regulation, which would still need bipartisan support.” Strategists at Morgan Stanley, as NBC quoted them, put it this way: “Key market implications include incrementally negative AI sentiment on greater expectations for data center restrictions.”

In Texas, much was already frozen. On Aug. 3, Reuters reported, Gov. Greg Abbott halted the connection of new data centers to the state’s grid and ordered an audit of the projects; by then ERCOT, the state’s grid operator, was tracking more than 400 gigawatts of data-center projects seeking to connect.400 GigawattsReuters put the figure at “roughly equivalent to what it would take to power the entire US South.” Mr. Abbott did not issue a formal moratorium, and the audit was expected to conclude at the end of 2026, Reuters reported.

The Associated Press reported that Gina Hinojosa had beaten Mr. Abbott, and that Democrats had taken control of the Texas House. She takes office Jan. 19, The Texas Tribune reported. “When I am governor I will issue a moratorium — a ban — on all data center approvals until laws can be passed by the Legislature to protect Texans,” she said in an Oct. 22 video posted to X, as quoted by the Tribune. Jess Heck, the Data Center Coalition’s director of government affairs in Texas, said in a statement reported by the Tribune that the coalition “looks forward to working with state leadership along with local officials, stakeholders, and Texas communities to continue building trust and supporting responsible data center growth.”

Nomura put more of the risk further out. It said in a note on Wednesday that much of the capacity due in 2027 was already under construction, and that projects planned for 2028 faced greater exposure to permitting delays and regulatory uncertainty, CNBC reported.

The Price

The price question came from Exelon, which asked the Federal Energy Regulatory Commission to require PJM to hold its capacity auctions closer to the period when the power is delivered. The complaint, Docket No. EL27-11, is dated Nov. 3 on FERC’s eLibrary; Exelon announced it on Wednesday. It asks for auctions run two months before each delivery year, starting with 2030–31, and says that “nothing in this complaint is intended to apply to, or otherwise disrupt the implementation of,” the 2029–30 auction in December.CapacityCapacity payments pay power plants and other resources to be available when needed, “a commitment of resources to deliver when needed,” in PJM’s words; they are separate from payment for the electricity generated.A Prompt AuctionExelon says the change “would bring PJM in line with other capacity markets in the country that already use prompt auctions.”

“PJM’s capacity market is producing high prices without stimulating necessary investment at a time when customers are already facing significant affordability pressures,” the company said in its release. The current approach, it said, “compounds these challenges by locking in capacity costs years before power is needed.” Colette Honorable, Exelon’s chief legal officer, said in the release: “Exelon is taking this action at FERC to push for a narrow change that can meaningfully contribute to producing capacity market prices that reflect actual market conditions and better protect customers from unreasonable costs.”

Exelon is taking this action at FERC to push for a narrow change that can meaningfully contribute to producing capacity market prices that reflect actual market conditions and better protect customers from unreasonable costs.

What Exelon calls costs locked in years early is, from the other side of the auction, revenue locked in years early. A complaint is a request, not a ruling, and Exelon wrote that a prompt schedule “alone will not solve the affordability challenges facing the region,” and that “PJM also urgently needs more generation.” PJM answered on Wednesday that it opposes fast-track handling of the complaint and asked until Dec. 21 to reply on the merits; it “disagrees with Exelon’s assertion that a prompt auction is just and reasonable on its own without a suite of complementary enhancements,” it wrote. PJM’s auction for the 2029–30 delivery year, which the complaint leaves alone, opens Dec. 9, with results due Dec. 22, as this paper has reported.

What Holds

Late on Wednesday, New York time, came one promise from a buyer. In a compact for future campuses it owns and operates, OpenAI wrote: “We’ll pay the full cost of the electricity we use and the infrastructure needed to serve us.”

The day’s working theory, as JPMorgan’s James Sullivan put it to CNBC on Thursday, was that “existing capacity is significantly more valuable now because of incremental supply constraints.” He was speaking of data-center capacity, and on Wednesday Microsoft rose 6.68 percent and Amazon 6.12 percent.MSFTNasdaq545.18▲14.57+2.7%Microsoft · Monday’s session Wednesday’s prices rewarded the biggest cloud companies, but not the power generators. In trading before the open on Thursday, as of 7:52 a.m., Vertiv was down 4.11 percent and GE Vernova 3.73 percent.

The next tests are PJM’s 2029–30 auction, which opens Dec. 9, and Texas, where Ms. Hinojosa takes office on Jan. 19 and the Legislature meets in January. Then there is what FERC does with Exelon’s complaint, and what Constellation, Vistra and Talen tell their investors about Tuesday.