A capped price for scarce power

On 14 July, PJM Interconnection — the grid operator for 13 states from Illinois to Virginia, plus Washington DC — published the auction that sets what power plants are paid simply to be available in the 2028-29 delivery year. It cleared at $325 per megawatt-day, the legislated ceiling and 2.5% below the previous auction, the third consecutive clear at the maximum. PJM still procured 6.8 GW less than its reserve-margin target required.

Absent the price collar, PJM's own model shows the auction would have cleared at $555. That gap is the mechanism the market is now pricing: roughly $230 a megawatt-day of scarcity rent that a tightening grid is generating but not paying out. Demand outran supply, and the clearing price went down.

Vistra, which sells retail electricity and gas to about 4.3m customers across 20 states while operating some 38,700 MW of nuclear, gas, coal, solar and battery generation, cleared 10,924 MW into that auction. NRG, which serves roughly six million retail customers under the Reliant, Direct Energy and Green Mountain brands from a mostly gas fleet concentrated in Texas, holds about 2 GW of upgrade projects in PJM — and told investors less than half of them clear an economic hurdle even at the higher $555 reference, so it is negotiating directly with buyers instead.

Two clusters, not a slide

Both stocks fell roughly 18% over the past month, but almost none of it accumulated quietly. The week beginning 22 July took Vistra down 10.9% and NRG 8.9% as a semiconductor-led selloff pulled money out of AI-adjacent names with no company news attached. Then NRG's second-quarter report dropped the shares 15.4% in one session on about six times normal volume. Chain those two windows and you exceed the full month's decline — the sessions in between were net positive. NRG closed higher on nine days inside the window and lower on ten.

The move was not confined to the pair. Talen Energy, a nuclear and gas merchant generator, fell 15.9% over the same stretch. Constellation Energy, the largest US nuclear operator, was flat — and it is the one that raised full-year guidance, signed about 920 MW of new long-term nuclear contracts at an 18.5-year average tenor, and owns no Texas gas fleet.

The business splits

Vistra diverges from its own share price. Adjusted EBITDA rose about 30% to $1.767bn, generation profit climbing 68% to $994m while retail held steady. Management reaffirmed 2026 guidance of $6.8-7.6bn and held 2027 at $7.4-7.8bn even with Texas forward power curves meaningfully below last October's baseline. Critically, the contracted offtake is signed and priced and still outside those numbers: more than 2,600 MW of 20-year nuclear supply to Meta, up to 1,200 MW to Amazon Web Services from Comanche Peak beginning late 2027, and the roughly 5,500 MW Cogentrix gas fleet. Cogentrix and Meta together are worth about $700m to the 2027 midpoint, excluded pending an update in the autumn.

NRG's fall follows its results. Adjusted earnings of $1.49 a share missed the $1.82 consensus. Texas EBITDA dropped $131m because around-the-clock Houston power averaged $33 a megawatt-hour against a $52 planning assumption. Gross margin narrowed to 14.5% from 16.5%: the LS Power acquisition bought scale, not profitability. Virginia's re-entry into a regional carbon program added a $70m drag that was not underwritten, and the leverage target slipped a year to 2029. Its headline data-center project — 1.2 GW for an unnamed investment-grade hyperscaler, $3.2bn of capex, 2029 startup — is still at aligned commercial terms with no final investment decision.

The Texas backdrop is a supply story, not a demand one. Some 14 GW of batteries arrived before the data centers did, compressing the intraday spreads gas fleets earn on. Then on 3 August Governor Greg Abbott ordered an audit of every data-center project in the queue, citing about 474 GW of interconnection requests — five times record peak demand. ERCOT missed its next study deadline; 250 to 300 projects are gated.

What the price now assumes

Vistra trades at 15.49x forward earnings against 22.93x trailing, and at 10.13x trailing enterprise value to EBITDA versus Constellation's 14.74x — the appropriate lens here, since hedge accounting swings reported profit violently. In early May the trailing multiple was 73.9x on a $54.55bn market value; it is $46.31bn now. Consensus has Vistra earning $8.86 a share this year and $10.56 next. NRG, at 12.83x forward and 30.02x trailing, is now the cheapest forward multiple among the four, having entered May at 38.6x — but its free-cash-flow yield of 1.44% is half Vistra's 2.97%.

The setup

Where it stands — Demand and contracted megawatts are rising at both companies while a capacity price cap and Texas battery supply hold realized prices down.

Would confirm — Vistra folding Cogentrix and the Meta contracts into 2027 guidance at the third-quarter update, lifting the midpoint toward $8bn.

Would invalidate — Vistra cutting or trimming its reaffirmed 2027 range of $7.4-7.8bn, or ERCOT around-the-clock prices staying near $33 a megawatt-hour into 2027.

Watch next — The Texas data-center audit resolves in roughly two months; NRG's final investment decision on its 1.2 GW project is still pending.

Valuation — Vistra 15.49x forward, 22.93x trailing, against 73.9x trailing in early May; NRG 12.83x forward against 30.02x trailing.