Texas has more electricity demand queued up than it can plausibly serve. The state's grid operator, the Electric Reliability Council of Texas (ERCOT), is processing roughly 474 gigawatts of interconnection requests — more than five times the state's record peak demand, about 90% of it data centers. On 3 August, Governor Greg Abbott directed ERCOT and the Public Utility Commission to audit every one of those projects before any further connections advance, effectively pausing the pipeline that the state's regulated wires companies have been building capital plans around.

That matters because regulated utilities are not paid on power prices. They earn an allowed return on capital they put in the ground, so a load pipeline is a capital-spending pipeline, and a pause on the first is a pause on the second.

The two Texas names

Sempra, a San Diego holding company that owns the Oncor transmission network serving 3.8 million Texas customers, gas and electric utilities in California, and liquefied natural gas (LNG) export terminals on the Gulf Coast, is the most exposed. The freeze clouds Oncor's roughly 44 gigawatt large-load pipeline, though management publicly supported the pause and said KKR's purchase of 45% of Sempra Infrastructure remains on track to close this quarter, deconsolidating about $9bn of debt.

The business is not deteriorating. Second-quarter revenue was flat at $2.997bn but operating income rose 42.5% to $832m and net income 68.5% to $797m, with margin widening from 19.5% to 27.8%. Adjusted earnings of $1.16 a share beat the $1.07 consensus and guidance was affirmed. Consensus has 2026 earnings at $5.11, up 11.5% — the fastest in this group — yet Sempra carries its cheapest forward multiple, 16.4 times, against 23.0 times trailing. This desk's own read in May had it at 33.8 times trailing. That is a genuine dislocation, on a business whose Texas growth is delayed rather than cancelled.

CenterPoint Energy, the Houston electric and gas distributor, is the opposite case. Revenue rose 10.7% to $2.152bn, operating income 28.1%, and it lifted its ten-year capital plan to $66.7bn with no new equity, guiding Houston Electric rate-base growth above 18% a year. But $800m of that increase funds system upgrades for ERCOT's "batch zero" large-load approval process — the process ERCOT has now delayed — and CenterPoint's 14 gigawatts of eligible projects sit inside it. At 21.3 times forward earnings, the most expensive here, the multiple was underwriting a queue the state has just stopped.

Where the gas generation actually is

Only three of these seven own material gas-fired plant. Southern Company, which serves 8.7 million customers across Georgia and Alabama, raised 2026 guidance to the top of its $4.50-$4.60 range as data-center usage jumped 55% and contracted large-load agreements passed 17 gigawatts, backed by roughly $21bn of collateral and minimum bills covering the full incremental cost to serve — the cost-allocation question settled in shareholders' favour. Georgia Power has signed a 25-year agreement with OpenAI for 3.2 gigawatts at the $20bn-plus Project Camellia campus, powered mainly by new gas, and the Department of Energy closed $26.5bn of loans to Southern's utilities financing 5 gigawatts of new gas generation. Southern trades at 20.2 times forward earnings.

Duke Energy, with 50,259 megawatts across six states, settled its North Carolina rate case at a 9.8% allowed return, reported adjusted earnings up 14%, and has raised its GE Vernova turbine order to 26 units. It trades at 18.6 times forward against 18.7 trailing — no de-rating priced at all — and the group's lowest enterprise value to EBITDA, 11.6 times. OGE Energy, an Oklahoma utility with 7,207 megawatts, is the smallest and carries the highest trailing free cash flow yield, 11.5%.

The other two are not gas generators. Dominion Energy's headline project is $11.65bn of offshore wind, 81% complete, with 53 gigawatts of data-center capacity in contracting. Its tape and its accounts disagree: revenue grew 19.6% while operating income fell 2.4% and net income 55%, and the trailing multiple expanded from 18.1 to 23.3 times on the slowest consensus growth here, 4.9%. Public Service Enterprise Group's generation arm is nuclear, and its New Jersey utility faces a governor who declared a utility affordability emergency; GAAP operating income fell 43.6%.

Verdicts

Does the business explain the selloff? CONTRADICTS at Sempra, CenterPoint and Southern, where results and guidance improved; CONFIRMS at PSEG. The rate explanation fails too: the 10-year Treasury yield fell 7 basis points to 4.6% on 7 August after payrolls shrank 23,000, during the week these stocks fell. Does valuation justify it? INCONCLUSIVE across the group — Sempra's compression is real, CenterPoint's is deserved, Dominion's expansion is not earned. Merchant generators Vistra and NRG, paid on power prices rather than allowed returns, fell far harder over the same month, and Fitch Ratings moved its North American utility outlook to "deteriorating" on affordability grounds in June.

The setup

Where it stands — A Texas regulatory freeze, not interest rates, repriced the two Texas-exposed utilities while their reported earnings and capital plans rose.

Would confirm — ERCOT restarts batch-zero approvals with CenterPoint's 14 gigawatts and Oncor's queue largely intact after the audit.

Would invalidate — The audit strikes a large share of the 474-gigawatt queue, or Sempra cuts its $4.80-$5.30 guidance.

Watch next — Third-quarter results in late October, and the KKR sale of 45% of Sempra Infrastructure closing this quarter.

Valuation — Sempra 16.4x forward against 23.0x trailing and 33.8x trailing in May; CenterPoint 21.3x forward, the group's highest.