Texas's governor on 3 August ordered state regulators and the grid operator to audit every data-center project waiting in the interconnection queue before any further approvals, after connection requests swelled to 474 gigawatts — roughly five times the state's record peak demand, with data centers about 90% of the total. The grid operator has suspended its scheduled large-load classification notices and halted the related transmission study until the review finishes, and will seek an exception at a 20 August regulatory meeting. BloombergNEF estimates the pause could delay 49.8 gigawatts of data-center load and cost projects up to $15bn.

That matters because the entire re-rating of Texas merchant power in 2025 rested on those queue numbers being real demand. The audit does not cancel anything; it postpones the moment anyone finds out.

The split runs on geography, not on the theme

This is not the artificial-intelligence power trade unwinding wholesale. Over the past 30 days Constellation Energy, the largest US nuclear fleet owner and a PJM-region operator, is up 10.4%, and Talen Energy, another PJM generator, is down only 5.5%. The losses are concentrated in the two Texas-weighted names: NRG Energy, a Houston company selling electricity to about 6 million retail customers under the Reliant, Direct Energy and Green Mountain brands while owning gas, coal, solar and nuclear generation, and Vistra, an Irving, Texas integrated retailer-generator with roughly 38,700 megawatts serving 4.3 million customers in 20 states. The equipment side has kept its premium entirely: GE Vernova, which builds the turbines both companies have booked, is up 53% over twelve months.

Vistra: the business contradicts the tape

Vistra reported quarterly revenue of $5.003bn, up 17.7%, with generation segment adjusted profit up 68% to $994m on hedging, higher PJM capacity revenue and the Lotus acquisition. Operating income was $1.525bn against $515m a year earlier. Management reaffirmed 2026 adjusted EBITDA guidance of $6.8–7.6bn and held the 2027 range of $7.4–7.8bn, while conceding it is biased toward the lower end absent a move in power curves. Neither the pending $4bn Cogentrix acquisition — 10 gas plants totalling 5,496 MW, closing mid-to-late 2026 — nor the Meta contract sits in that 2027 number; together management puts them at about $700m.

On contract quality, the bearish premise fails. Vistra's Meta agreements are signed 20-year power purchase agreements for 2,609 MW of nuclear capacity, with dated deliveries beginning late 2026. Business verdict: CONTRADICTS the move. Two caveats: per-share growth is heavily buyback-assisted — the diluted count fell from 482m in 2021 to 340m in 2025 — and reported gross profit was negative $943m last quarter, a hedge-accounting artefact that makes the 60.3x trailing price-to-earnings ratio meaningless.

Valuation verdict: POSSIBLE DISLOCATION. At 15.5x 2026 consensus earnings of $9.06, 13.0x 2027's $10.93 and 11.2x 2028's $12.69, with trailing enterprise-value-to-EBITDA at 13.7x and a 1.96% free-cash-flow yield depressed by growth spending, the shares carry a shrinking multiple against unchanged guidance.

NRG: the de-rating is doing work

NRG's adjusted EBITDA rose 34% to $1.2bn, but that came from the first full quarter of the LS Power assets ($370m of East-segment contribution), not the base business. Adjusted earnings per share fell to $1.49 from $1.73 against roughly $1.82 expected; the diluted share count rose from 196m to 210m, so this profit growth was bought rather than earned. Texas segment profit fell $131m as Houston power averaged $33 per megawatt-hour, well under the $52 planning assumption. Virginia's re-entry into a regional carbon program added a $70m cost drag. Full-year 2025 operating income had already fallen 23.7% to $1.85bn. Guidance of $7.90–$9.90 was reaffirmed but flagged as landing below the midpoint, and the shares hit a 52-week low. Its headline 1.2 GW data-center project is at "aligned principal commercial terms" with an unnamed counterparty — pre-land, pre-final-investment-decision — against Vistra's executed contract. Growth spending of $721m has pushed NRG's 3x net-leverage target from 2028 to 2029. Business verdict: INCONCLUSIVE, tilting negative. Valuation verdict: JUSTIFIED DE-RATING — 13.3x forward, 30.9x trailing, 11.4x EV/EBITDA, 1.40% free-cash-flow yield.

One structural point cuts against the bear case for both. PJM's capacity auction for 2028/29 cleared at the $325 per megawatt-day regulatory cap for a third straight time, versus $555 in PJM's own uncapped simulation, and procured 138,318 MW — 5.6% below its own reliability requirement. Scarcity is being suppressed administratively, not resolved.

On the tape: both names have been below trend since spring, but the 30-day damage is two sessions — 4 August, when NRG fell 15.5% and Vistra 8.2%, and Vistra's late-July print. That is event risk, not drift.

The setup

Where it stands — Texas's connection freeze hit the two Texas-weighted generators; Vistra's numbers improved through it, NRG's did not. Would confirm — NRG's full-year adjusted earnings per share landing in the lower half of $7.90–$9.90 with Texas realisations again below $52 per megawatt-hour. Would invalidate — Vistra guiding 2027 adjusted EBITDA above the $7.4–7.8bn range once Cogentrix and Meta are consolidated. Watch next — The Texas regulator's 20 August open meeting on the grid operator's good-cause exception request. Valuation — Vistra 15.5x 2026 and 13.0x 2027 earnings; NRG 13.3x forward against 30.9x trailing, down from 38.6x in May.