The power plant power players

In today’s episode of The Entire Economy Is Datacenters, two of the biggest names in the power game just teamed up.

NextEra Energy is buying Dominion Energy in a deal valued at nearly $67 billion, the companies announced today. The merger will create the world’s largest regulated electric utility business with a market cap of about $249 billion. The new company, which will still operate under the NextEra name, will be the third-largest US company in the energy sector, behind only Exxon Mobil and Chevron.

NextEra is currently the largest renewable energy developer in the US, and headquartered in Florida, while Dominion is based in Virginia, where it powers the largest datacenter market in the world (Northern Virginia). Together, the companies will serve about 10 million utility customer accounts across the east coast.

The deets: NextEra is offering about $76 per share to Dominion shareholders, along with a one-time cash payment valued at $360 million, and 0.8138 NextEra shares for each Dominion share. Once the deal closes, NextEra shareholders will own roughly 75% of Dominion, with Dominion shareholders owning the remaining quarter.

Shares of Dominion jumped 9.44% on the news, while NextEra fell 4.63%.

AI is making utilities cool again

Datacenters, the infrastructure at the heart of the AI boom, don’t just require huge amounts of cash to function, but startling amounts of energy, too. That’s why utilities, the most boring space on the Monopoly table, has suddenly become a hot sector.

Despite more recent headwinds from energy volatility tied to the Iran war, the sector is expected to keep the good times rolling longer term. “Looking ahead, we expect utilities to grow EPS at above historical rates through at least 2030, driven by continued strength in electric demand as large-load customers—including datacenters and advanced manufacturing facilities—ramp toward full capacity,” explained Tim Winter, portfolio manager at Gabelli Funds in a recent note.

To AI bulls, this merger is “the clearest possible confirmation that the AI-driven power demand supercycle is not a cyclical trade but a decades-long infrastructure build,” explained Wedbush analyst Dan Ives in a note today.—LB