Americas Power and Energy Transition: Dear PJM, It's not you..oh wait - it IS you!

PJM is short on power generation, however FERC has intervened and not allowed PJM to rush to procure supply without a clear understanding of who pays for what. ERCOT is in a different spot - with cost allocation rules written first, the PUCT adopted the large load interconnection rule in September. The uncertainty in ERCOT is what happens with the queue, and we anticipate clarity on that in December. In this quick note, we compare and contrast PJM and ERCOT and go through what we think is a reasonable timeline in which markets will get clarity. Both markets are moving the risk of speculative load off general ratepayers and onto the data centers. We see the winners as generators that provide firm, contracted, creditworthy load and the utilities that serve it. We rate CEG, VST, and NEE as Outperform, with price targets of $296, $181, and $108 respectively.