What does the blue wave mean for Texas power plant owners?
Vistra, the largest electricity generator in Texas, suffered the worst stock price plunge among its power plant operator peers since Tuesday, with shares falling 19% through Thursday. Friday's 10% rally only partially reversed that decline.
The state, a hotbed of data-center activity, elected Democratic governor Gina Hinojosa. Democrats won a majority in the Texas House of Representatives, too, though Republicans retained their majority in the Texas Senate.
Vistra doesn't think the blue wave spells doom for data-center development. Asked about a prolonged moratorium on data centers in Texas on its Friday earnings call, Vistra Chief Executive Officer Jim Burke said that is a "bridge too far from where the dialogue is at this point," based on conversations the company is having with legislators.
"I have not heard the governor-elect and I haven't heard the legislature say that they do not want Texas to have any of this [data center] load." What is more likely is higher standards around which data centers get to connect to the grid, he said.
Wholesale forward power prices in Texas have already been going the wrong way for power plant owners, declining more than 20% year to date, according to a report from Jefferies. Part of that can be blamed on the data center permitting pause that current Republican Gov. Greg Abbott put in place.
Even after Friday's uptick, Vistra's forward earnings multiple of 12.6 times is about 44% lower than where it was a year earlier. Its valuation might stay pressured until Texas' newly elected politicians give clarity on their long-term data center policies.
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