US power producers fall as PJM unveils plan to curb power demand surge from data centers

Shares of U.S. power producers decline premarket after grid operator PJM Interconnection unveiled a plan to manage surging power demand from data centers that Big Tech needs for its AI expansion

PJM late on Friday said it plans to require new large power users to either bring their own power generation or enter into a connect and manage framework subject to early curtailment

After the news, brokerage Jefferies said PJM's decision will make investors question the earnings, cash flows, probability of above-market contracts, and valuation multiples in earnest for the first time in some time

Constellation Energy CEG.O down 2.8%, Vistra Corp VST.N declines 2.8% and Talen Energy TLN.O falls 3.7%

NRG Energy NRG.N slips 2.7%

"We think U.S. power producers' stocks are overvalued as investors underestimate regulatory risk and potential pressure on long-term margins," Morningstar said on Friday