He still has his powers, but it's been shown he can't use them very well anymore, due to his exhaustion (from the insomnia). Whenever he tries, he gets really bad migraines or something. It's annoying because Sand can be really powerful and is practically unkillable, but this current dream-weakness is holding him back. I figured he got the new costume to show the reduction in the use of his old powers and new reliance on Wesley's power set.