On 3 August, Texas Governor Greg Abbott directed the state's Public Utility Commission and its grid operator to verify every data center advancing through the interconnection process before another one is approved. The queue at ERCOT — the Electric Reliability Council of Texas, which runs the state's grid — holds roughly 474 gigawatts of requests, about 90% of them data centers, and the audit covers 250 to 300 projects. ERCOT then missed its 7 August deadline for "Batch Zero," the first tranche of large loads to be studied, and asked for extensions. The review is expected to run for months.

That lands on two companies more directly than on anyone building turbines or reactors.

The wires business gets paid on capital, not on power

CenterPoint Energy is a Houston holding company whose electric arm owns the poles, wires and 239 substations that deliver power in Houston but sells no generation; it also distributes natural gas across eight states. Sempra, of San Diego, owns two California utilities and, in Texas, Oncor — a pure transmission-and-distribution business serving 3.8m customers across 140,000 miles of line.

Neither profits from a megawatt sold. They profit from capital spent: a commission sets an allowed return on the substations and lines they build, and that return accrues whether the load behind it is an aluminum smelter or a training cluster. CenterPoint Houston Electric is authorized 9.65% on a 43.25% equity layer; Oncor won 9.75% in an April settlement worth about $560m of extra revenue. Roughly 85% of CenterPoint's spending is recovered through automatic trackers rather than full rate cases, which is how it keeps the lag between spending and earning short.

So the only thing that matters is whether the load is real. Texas Senate Bill 6 was written to answer that: loads of 75 megawatts or more must demonstrate site control and post security starting at $50,000 per megawatt, doubling at the next stage. CenterPoint says it already holds $900m of customer cash and security against its pipeline, expects system upgrades to cost under $60m per gigawatt, and earns about $6m per gigawatt each month in demand charges. That is a genuinely contracted business — for the projects that clear.

The results say one thing, the shares another

CenterPoint's second-quarter revenue grew 10.7% to $2.15bn and operating income 28.1% to $534m, after a first quarter that grew 1.9%. On 28 July it raised its ten-year capital plan to $66.7bn from $65.5bn and reiterated 2026 earnings guidance of $1.89 to $1.91 a share. Two-thirds of the increase is driven by large-load customers, and Houston Electric's rate base is guided to grow about 18% a year.

Sempra's quarter was stranger: revenue flat at $3.00bn, operating income up 42.5%, net income up 68.5%. The uplift arrives below the revenue line because it is a regulated return, not a volume. Its $65bn five-year plan is 95% regulated, and guidance was reaffirmed. Oncor received 44 gigawatts of Batch Zero requests, a 140% lift to its peak — none of it in the capital plan.

Both stocks fell through August, and gradually: CenterPoint's worst session was -2.65%, Sempra's -2.68%. There was no gap. Every large regulated utility fell together, which points at the discount rate. The 30-year Treasury yield touched 5.323% on 18 August, a 19-year high.

That matters more here than for most sectors, because rate-base growth is cash burn: CenterPoint's trailing free cash flow yield is -10.5%, Sempra's -10.7%. The gap is funded externally. Oncor's authorized cost of debt is 4.94%, while Ameren Missouri priced 30-year first mortgage bonds at 5.55% in February — before the long bond rose further. New money already costs more than the debt embedded in rates.

Which fall bought something

On unchanged consensus earnings, Sempra's forward multiple has gone from 17.9x in May to 16.5x, against a utility sector median near 18.8x, at 1.68x book — the cheapest per dollar of equity of the three. It is also selling 45% of its infrastructure arm for about $10bn, removing nearly $9bn of debt. CenterPoint's forward multiple fell from 22.2x to 20.7x, but it was 19.9x a year ago: the decline has unwound three months of expansion, not created a discount.

NextEra Energy, which pairs Florida Power & Light with the largest US renewables developer, is the useful contrast. Its Florida franchise is accelerating — large-load expectations raised from 6 to 8 gigawatts by 2032, a 35.1-gigawatt competitive backlog — yet it trades at 3.09x book and will issue roughly 716m shares to Dominion holders, with a shareholder vote on 3 September. Its de-rating is about issuance and funding cost, not demand. So is the rest of the group's.

The setup

Where it stands — Earnings and capital plans are rising at both Texas wires utilities while their shares fall on financing cost and a state-ordered queue freeze.

Would confirm — CenterPoint's September distribution cost recovery filing implemented on schedule, and Batch Zero studies resuming with its 14 gigawatts intact.

Would invalidate — A cut to CenterPoint's $1.89-$1.91 guidance, or large-load projects withdrawing rather than posting the $50,000-per-megawatt security.

Watch next — The ERCOT audit's completion, expected within months; NextEra's shareholder vote on the Dominion merger on 3 September.

Valuation — Sempra 16.5x forward and 24.3x trailing, versus 17.9x forward in May; CenterPoint 20.7x forward against 19.9x a year ago.