Key Facts on New Power Cost Initiative
On January 16, 2023, the Trump administration, alongside a bipartisan group of governors, announced a plan aimed at lowering residential utility costs by requiring major tech companies to fund new power-generation projects. This initiative targets PJM Interconnection, the largest power grid in the U.S., and is expected to generate approximately $15 billion for new power plants through emergency auctions.
As a result of the announcement, GE Vernova (NYSE: GEV) experienced a 77% increase in its stock price over the past year, bolstered by a 50% rise in gas power orders and a doubling of equipment orders in the third quarter. The company currently has 33 gigawatts of firm orders and another 29 gigawatts in slot reservation agreements, reflecting strong demand for power generation equipment.
Under the new plan, tech giants such as Microsoft and Alphabet will be liable for construction costs through 15-year contracts, regardless of their actual power usage. Meanwhile, independent power providers like Constellation Energy and Vistra face potential stock declines due to imposed price caps.
