Vistra Energy (NYSE: VST) is a popular stock to play the growing demand for energy to run artificial intelligence data centers. The stock has had an up-and-down year and took a hit last month when regulators from one of the largest power-serving regions of the U.S. proposed measures to curb power costs and get hyperscalers to pay for their own power generation.
The news hurt Vistra’s independent power producer business, which has a slew of energy-generating assets that benefit from rising power prices. With the stock down 22% from its recent September peak, is it time to buy Vistra?
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Vistra Energy operates as an independent power producer, meaning it owns and operates power generation facilities to provide electricity to consumers, but isn’t a traditional utility provider. Instead, the company produces electricity for sale to utility companies in the wholesale market and for direct sales to residential, commercial, and industrial customers.
The company is one of the largest competitive power generators in the U.S., with a fleet of assets that include natural gas, nuclear, coal, solar, and battery storage facilities. As of last year, the company had over 44,000 MW of power-generating capacity, of which 59% was from natural gas alone. It participates in all major competitive wholesale markets in the U.S., including ERCOT (Texas), PJM (Mid-Atlantic/Midwest), ISO-NE (New England), NYISO (New York), MISO (Midwest), and CAISO (California)
Vistra stock took a hit last month following reports that the White House and several U.S. governors reached a proposal to curb rising electricity costs, which included a two-year cap on future PJM Interconnection grid auctions; PJM recently agreed to extend this price cap.
PJM is one of the country’s largest grid operators by electricity demand and manages the transmission system for more than 65 million people. Recent PJM auctions have signaled that energy supplies are tightening and falling short of reliability requirements in the coming years, raising concern among both federal and state policymakers. To address this issue, the proposed backstop aims to accelerate the deployment of energy to help meet the growing demand.
The proposed measures negatively affected independent power producers, including Vistra and Constellation Energy, both of which serve the PJM region. Vistra has already cleared 10,314 MW in the 2026/2027 PJM capacity auction at a clearing price of $329.17 per MW-day. Since these prices are already established, a future price cap would primarily impact auctions for later years (2028/2029).
