The wholesale price of electricity around the clock in Houston averaged $33 a megawatt-hour in the second quarter, about 8% below a year earlier. NRG Energy — which sells power to some six million retail customers under the Reliant, Green Mountain and Direct Energy brands and owns the generation behind them — had built its year on an assumption of $52. Its Texas adjusted earnings before interest, tax, depreciation and amortization fell $131m, adjusted earnings per share came in at $1.49 against $1.73, and the shares fell 15.5% in the single session of August 4, the day it reported.

That is the central fact of the merchant power complex this summer, and it is easy to mistake for something else. Demand from data centers is not what is deflating. The price of the megawatt-hour is. For the unregulated producers that own the plants a data center actually burns — the layer whose revenue is a direct function of the AI load story — the two are not the same thing at all.

Batteries arrived before the data centers did

In Texas the compression is physical. Roughly 41.5 GW of solar and storage is expected online across 2026 and 2027, and battery price spreads fell about 50% year on year by June, flattening precisely the intraday spikes a merchant gas plant exists to monetize. Vistra's management put a number on it: on July 22 the ERCOT real-time market cleared at $57/MWh in tight conditions where, absent battery competition, it suggests $400 to $500 was plausible. Fuel is falling too — the Energy Information Administration's August outlook cut Henry Hub gas to $3.44 per million British thermal units for 2026 and $3.31 for 2027, and gas sets the marginal power price in nearly every US market.

The one auction print that exists cuts the other way. PJM's capacity auction, announced July 14, cleared at $325 per megawatt-day across the whole footprint, 2.5% under last year's $333.44. But it cleared at the approved cap while falling 6,831 MW short of PJM's own reliability requirement — an administrative ceiling rather than slack demand. ERCOT, an energy-only market, holds no capacity auction at all.

One of these two disclosed a worse business

NRG did. Its second-quarter adjusted EBITDA rose 34% to $1.2bn, but that is acquisition arithmetic — the first full quarter of the LS Power fleet added $370m in the East, alongside the interest and depreciation that pulled per-share earnings down, plus a $70m cost drag from Virginia's unexpected July 1 re-entry into a regional carbon program. Its guidance splits Texas economic gross margin at $4.3bn to $4.55bn, roughly half of it consumer retail rather than wholesale generation. The headline 1.2 GW hyperscaler plant is aligned commercial terms pending a final investment decision, not contracted load. "We will not trade discipline for scale," chief executive Robert Gaudette told analysts on August 4. "Each project must stand on its own."

Vistra disclosed the opposite. Adjusted EBITDA rose about 30% to $1.77bn on realized prices roughly 5% higher and more PJM capacity revenue; full-year guidance of $6.8bn to $7.6bn was reaffirmed. It has hedged approximately 100% of expected 2026 generation, 94% of 2027 and 72% of 2028 — which is why falling Texas power did not dent the quarter, and why a recovery would not lift it much either. It holds 20-year contracts supplying Meta with more than 2,600 MW of PJM nuclear output, a separate 20-year, 1,200 MW agreement at Comanche Peak in Texas, and August regulatory approval for Cogentrix, ten gas plants totaling 5,500 MW for a net $4.0bn. Its 2027 opportunity range of $7.4bn to $7.8bn excludes both Cogentrix and Meta, which management calls roughly $700m additive — while saying the range itself now trends to the low end on ERCOT forwards.

What the shares did, and what it buys

Vistra is down 28.4% over twelve months and NRG 22.5%; since August 4 both have traded with their 50-day average below their 200-day. Constellation, Talen and PSEG each fell roughly 13% over the same year, so this is name-specific rather than a rates story. Vistra sits at 15.4x forward earnings against 22.7x trailing and about 10x trailing EV/EBITDA; NRG at 12.7x forward against 29.6x trailing is now the cheapest name in the complex.

The honest split: NRG's de-rating is earned, because its Texas margin actually shrank and its growth is capital not yet committed. Vistra's is not explained by anything it has disclosed — an EBITDA line up 30%, a hedge book that removes the downside it is being marked for, and contracted nuclear the guidance range does not include. What the market appears to be pricing is the 2027 drift toward the low end and the possibility that Texas power stays where it is. The hedges cut both ways: they are why the second quarter held, and why a price recovery reaches shareholders slowly.

On August 3, Texas Governor Greg Abbott ordered an audit of every data center in ERCOT's interconnection queue — some 474 GW of requests, about 90% of them data centers — with the work due by December 10. Vistra supports the cleanup and puts realistic 2030 large-load additions at 12 to 15 GW. Chief executive Jim Burke expects the audit to "pause some of the reviews for a couple of months". Until December, the number of megawatts Texas will actually connect is a matter for the auditors.