diff --git a/app/CMakeLists.txt b/app/CMakeLists.txt
index 5f8dace8..b760389f 100644
--- a/app/CMakeLists.txt
+++ b/app/CMakeLists.txt
@@ -22,7 +22,6 @@ zephyr_linker_sources(RODATA include/linker/zmk-events.ld)
 # Add your source file to the "app" target. This must come after
 # find_package(Zephyr) which defines the target.
 target_include_directories(app PRIVATE include)
-target_sources_ifdef(CONFIG_ZMK_SLEEP app PRIVATE src/power.c)
 target_sources(app PRIVATE src/stdlib.c)
 target_sources(app PRIVATE src/activity.c)
 target_sources(app PRIVATE src/kscan.c)
diff --git a/app/Kconfig b/app/Kconfig
index 948eaeff..8be741ba 100644
--- a/app/Kconfig
+++ b/app/Kconfig
@@ -372,10 +372,6 @@ config ZMK_SLEEP
 
 if ZMK_SLEEP
 
-choice SYS_PM_POLICY
-	default PM_POLICY_APP
-endchoice
-
 config PM_DEVICE
 	default y
 
diff --git a/app/src/activity.c b/app/src/activity.c
index f31e608d..1fa75eb5 100644
--- a/app/src/activity.c
+++ b/app/src/activity.c
@@ -7,7 +7,7 @@
 #include <device.h>
 #include <init.h>
 #include <kernel.h>
-#include <power/power.h>
+#include <pm/pm.h>
 
 #include <logging/log.h>
 
@@ -20,6 +20,18 @@ LOG_MODULE_DECLARE(zmk, CONFIG_ZMK_LOG_LEVEL);
 
 #include <zmk/activity.h>
 
+#if IS_ENABLED(CONFIG_USB_DEVICE_STACK)
+#include <zmk/usb.h>
+#endif
+
+bool is_usb_power_present() {
+#if IS_ENABLED(CONFIG_USB_DEVICE_STACK)
+    return zmk_usb_is_powered();
+#else
+    return false;
+#endif /* IS_ENABLED(CONFIG_USB_DEVICE_STACK) */
+}
+
 static enum zmk_activity_state activity_state;
 
 static uint32_t activity_last_uptime;
@@ -55,7 +67,7 @@ void activity_work_handler(struct k_work *work) {
     int32_t current = k_uptime_get();
     int32_t inactive_time = current - activity_last_uptime;
 #if IS_ENABLED(CONFIG_ZMK_SLEEP)
-    if (inactive_time > MAX_SLEEP_MS) {
+    if (inactive_time > MAX_SLEEP_MS && !is_usb_power_present()) {
         // Put devices in low power mode before sleeping
         pm_power_state_force((struct pm_state_info){PM_STATE_STANDBY, 0, 0});
         set_state(ZMK_ACTIVITY_SLEEP);
diff --git a/app/src/power.c b/app/src/power.c
deleted file mode 100644
index 1803f62c..00000000
--- a/app/src/power.c
+++ /dev/null
@@ -1,34 +0,0 @@
-/*
- * Copyright (c) 2020 The ZMK Contributors
- *
- * SPDX-License-Identifier: MIT
- */
-
-#include <zephyr.h>
-#include <kernel.h>
-#include <power/power.h>
-
-#include <logging/log.h>
-
-LOG_MODULE_DECLARE(zmk, CONFIG_ZMK_LOG_LEVEL);
-
-#include <zmk/usb.h>
-#include <zmk/activity.h>
-
-bool is_usb_power_present() {
-#if IS_ENABLED(CONFIG_USB_DEVICE_STACK)
-    return zmk_usb_is_powered();
-#else
-    return false;
-#endif /* IS_ENABLED(CONFIG_USB_DEVICE_STACK) */
-}
-
-struct pm_state_info pm_policy_next_state(int32_t ticks) {
-    if (zmk_activity_get_state() == ZMK_ACTIVITY_SLEEP && !is_usb_power_present()) {
-        return (struct pm_state_info){PM_STATE_SOFT_OFF, 0, 0};
-    }
-
-    return (struct pm_state_info){PM_STATE_ACTIVE, 0, 0};
-}
-
-__weak bool pm_policy_low_power_devices(enum pm_state state) { return pm_is_sleep_state(state); }