The Texan Podcast - A Panel on Texas’ Growing Pains — The Texan’s 89th Session Kickoff

Episode Date: February 6, 2025

At The Texan’s 89th Session Kickoff event, Sen. Charles Perry (R-Lubbock), Rep. Ellen Troxclair (R-Lakeway), and Sen. Nathan Johnson (D-Dallas) joined Senior Reporter Brad Johnson for a discussion on Texas’ rapid population growth and the mounting challenges in infrastructure, water, and energy.Listen to more interviews from our 89th Session Kickoff wherever you get your podcasts. If you like what you hear, subscribe and leave us a review.

Hello everybody. My name is Brad Johnson, senior reporter at The Texan, if you didn't know that already. I've only done a few of these things. This panel is called Growing Pains. The concept is we have over 300,000 people coming here a year, lots of commercial activity coming. It brings a lot of prosperity to the state, but it comes with tradeoffs and problems we have to address. And that is going to be a big theme this session. We'll talk water. We'll talk power grid. We'll talk housing. And that is the objective of this. And our panelists we have to discuss this issue, Senator Charles Perry, Republican from Lubbock.

He is taking the lead on especially all things water. Representative Ellen Trask-Clair, Republican from Lakeway, right? From Central Texas. And then Senator Nathan Johnson, Democrat from Dallas. Thank you all for joining us um we'll kick it off with a broad question what's the biggest area of concern in relation to this growth the state of texas is facing senator perry i think i know where you're going on this well i'd say you got energy but what we don't talk about is water supply

and state of Texas about 25 years behind on water supply development our current plan will tell you that if you do a deep dive into the current water plan so energy and water are almost inseparable they each complement each other you kind of have to have one to do the other. But if I had to prioritize an infrastructure, for centuries, people have moved to where there was water. When water left, they left. If I had to prioritize the things we have to have as humanity, we have to have air, we have to have water, and energy, electricity, et cetera, is more of a quality of life issue at some level. We need to address water supply and development and infrastructure next session, this session, before we leave.

The good news is we have the supplies to develop, and two, we have the wealth to do that development. It's just a matter of a commitment to do it. So we'll get there, but obviously, Water Chairman, I believe water is, but I think there's common sense that backs up where we're at, that you've got to have water or you don't have anything else. And we have places in this state that needed water yesterday. We have signs and evidence across the spectrum in all areas of the state that are having well depletions. we're beginning to have private equity and

companies looking at Texas ask the question will you have water for me and my factory if we come and the answer today is maybe when we leave in 25 it has to be an affirmative yes for what we're gonna get to do to address the water challenges I caution we're in triage a lot before we get there because everything in water takes 20 years plus. So we've kind of gotten behind the curve, but if you need water 20 years from now and you're not beginning in 25 to address it,

you won't have it by 45. So that's where I'm at, but energy plays a role in that, and energy, we clearly understand, is another thing we've undercapacity, probably for legitimate reasons. All the prosperity that Texas has grown, we haven't been able to. These people that come to Texas didn't bring their schools, their roads, their water, or their energy.

They don't bring that with them. So we just need to recognize where we're at, which on a lot of levels where I'm sitting in a session, we still think as if we're a 10 million population state it's just a mindset that you've got to get past that we are way beyond that so that's where i see this session going represent traps claire it's unfair that you let him go first because you know you have to say absolutely hands down water especially i, statewide certainly, but my district is so unique and diverse because I go, I have very suburban communities that are in western Travis County down to very rural communities

in places like Comfort. And so, you know, yes, you drive past Lake Travis and you see it visually, you know, that it's not where it needs to be. And you have the wells going dry. And it's a challenge to get people who have the water, you know, when they turn on the faucet, they have the water. What it's like to be a family in a rural community where a well goes dry and you no longer have the sustenance that you need. So I absolutely think that this is the water session. We did a lot of good things last session. It was a step in the right direction.

But this is something that we need to now take kind of a sledgehammer to because we are so far behind. And like you said, we have the resources to do something about it. So I am very excited about the ideas that Senator Perry has proposed so far to make sure that the state is going to be able to keep up, catch up, and then keep up with the population that's here and that's going to be growing. And so that's one of my main focuses of this session. And, of course, transportation, the grid, housing.

There's plenty more that comes with it but none of that matters if you don't have water senator johnson yes to all of that and just picking it up and making it a little more broad it doesn't come in the form of a bill but i think we are at a point in texas when we have to shift our mindset senator perry i he was he was i think accurately describing that the state still thinks it's 10 million people it's like the city of still thinks it's 10 million people. It's like the city of Austin. It's built for 150,000.

There just happens to be a million people trying to navigate downtown streets. We do have to start looking at making long-term investments, and that means thinking about investing in water. If I asked each one of you to choose between $150 off of your property tax bill every year for the next 10 years or a water supply for the next 50 years I think I know which one you would choose. We probably don't have to make that choice explicitly But when you look at the next 50 years when you look at just the next 25 years Our population is going to increase by 10 million people. We could have a grid that has to double in size within five years We have health care that is lagging. We have an education system

I understand you had a little fun on the last session talking about vouchers or no vouchers, right? That's 2% of the student population. What about the other 98%? Actually, lump them all together in 100%. We are going to have to invest in public education. If we were to fund public education or private schools alongside and parallel to public education at the same levels that we did index for inflation from 2019 that would be 15 billion more dollars and we can all fret about it and say oh no I need 150 bucks off my property taxes but I think we have to ask ourselves in 30 years what will someone say thank you to Charles Perry and Ellen Troxler and Nathan Johnson

and all of you for and it's going to be the investments that we make today and those things AND ALL OF YOU FOUR. AND IT'S GOING TO BE THE INVESTMENTS THAT WE MAKE TODAY. AND THOSE THINGS SHOULDN'T GET BOGGED DOWN IN BIG IDEOLOGICAL BATTLES BECAUSE I THINK THERE'S A LOT, I CAN'T, THERE'S NO ONE ON THIS STAGE THAT THINKS WE SHOULD NOT BE PUTTING A BUNCH OF MONEY IN WATER RIGHT NOW. I'M HOPEFUL THAT THE SESSION WILL REFLECT THE SHIFT OF MINDSET THAT SENATOR PERRY AND I HAVE BEEN TALKING ABOUT FOR YEARS NOW. I THINK IF YOU BUILD IT, IF YOU DON'T BUILD IT, THEY WON'T COME, DOESN'T WORK.

I THINK YOU COULD SUMMARIZE IT IN THAT WAY, RIGHT? AND THAT MINDSET IN A LOT OF PLACES HAS NOT PANNED OUT WELL. SENATOR PERRY, UP THE STAIRS YOU SAID IT'S JUST A MATTER OF MONEY. WE JUST NEED THE MONEY TO GET IT GOING. IS IT REALLY THAT SIMPLE? IN THIS PARTICULAR ISSUE, I MADE THE COMMENT PRECLUDING THAT THAT THIS IS ONE ISSUE THAT DOESN'T HAVE A BROKEN FAMILY OR A BROKEN HEART ATTACHED TO the money to get it going is it really that simple in this particular issue i made the comment precluding that that this is one issue that doesn't have a broken family or a broken heart attached to it it's one that truly a commitment a resource to develop undeveloped water resources and build out that infrastructure that's all it takes is a commitment here's here's the philosophical policy shift that happened this session, or will happen. I move the conversation for water supply and funding is a local issue only for the most part. I move that to it is a statewide infrastructure conversation, no different than roads and bridges.

We must have a correlated, coordinated approach to developing an undeveloped water supply and moving it to where it needs to be. I clarify, undeveloped means you're not moving it from one section of the state to another and calling that new supply. That did not add to any volume of water available for Texans. We need 10 to 12 million acre feet of new water supply

on top of the 13, 14 million acre feet we use today. By 2050, at the latest. everything in water is 20 years. We've got to get started. The 10 to 12 million acre feet comes from marine desal where it makes sense. The water plant has about three new of those plants built into it. Brackish aquifers of about 5.2 being acre feet to develop. For conversation, one acre foot supports about nine Texans' annual use.

Brackish aquifers at 5.2 billion to develop. And then in the oil and gas industry, it's a twofer. Produced water, we get 25 million barrels of water per day out of the Permian Basin with oil production. It's nasty water. We are a third year into our third session into a pilot project to learn how to clean that up and make it

Beneficial use and the fourth option is to bring in water from contiguous states The old joke of Mississippi can send us water. It ain't going to be the Mississippi But we have legitimate opportunities going forward of acquiring water So we have four new sources of development that's truly adding to the overall volume available. It's just money. What we also did by moving it from local to statewide is we've taken it out of the hands of the local and here's the reason. No local jurisdiction can afford these projects. They're too expensive and they're too lengthy and it's created a patchwork of really depleting resources being developed,

not before what the community needed, but how much the community was willing to pay for. It's not a good way to go water. So as we go through this, we don't have a pay it forward society. Property tax relief comes to mind. What are you going to help for me today? Because I don't really care 20 years from now. I won't be here. That's a mentality that our locals face.

There's not a single mayor in this state that can come to you and say, give me $30 more a month. I will develop water supplies for your kids and grandkids so they can live in this community. Nobody's going to buy that anymore. So we can't rely on the locals to do this anymore. Now, the state will recover that cost when water delivery occurs. The grid that I've developed is pretty simple. We have a nationwide water problem. I'm hoping to get

national conversations started. At the end of the day, the grid that I've worked on is actually more complicated than what a national grid would, but we have to begin as a state to think they're not going to do it. We'll do it. They'll pay us back. We have the leverage to do it. We can save taxpayers' dollars. The $150 property tax that you got last year, great. You ain't going to see it this year, or $1,300 on average, I'm told. But what we might do is save you from paying $50 a month for water and sewer supply. So how we save consumers' money is all relative. I'd rather get something for it that the state needs to be the state of Texas that it is today going forward

We have pushed the water conversation too far in that Nuclear energy small-module reactors it all has kind of come together in a perfect storm So there's a lot of things that's tied to that where we're going to see benefit from Nathan and I've had those conversations in my district we're getting one of those by 30. and it's going to be deployed in the premium basin i hope on produced water desal plant so it's really the stars are aligned texas position better than any state to capitalize on our wealth but the technologies and the things that we're asking to do but we have to commit to doing it and and we have to think larger than me, and what did the legislature do for me?

We have $51 billion accumulated in property tax relief. In the current budget, there will be 32 billion plus in property tax commitment buy downs that we made since 19. That's a large chunk of obligation that you guys don't feel after two years. I would argue, as Nathan has said, it might be better to rethink and actually go to infrastructure so that we can keep having properties that go up in value and Texas survive but thrive. Senator Johnson, one of

the big water fights going on in the state, and it's been going for decades, is the Marvin Nichols Reservoir. And that's a project to build a reservoir out in northeast Texas and ship the water over to Dallas, Fort Worth for their use. It's a question of competing rights, right? Property rights versus the right to one of the most basic sources of life. Do you see that divide being bridged at all? How do you fix that? How do you make it so that we can actually build something like this if that is the route chosen?

I don't think that that's going to get solved legislatively this session because it hasn't been festering for long enough. THE ROUTE CHOSEN. I DON'T THINK THAT'S GOING TO GET SOLVED LEGISLATIVELY THIS SESSION BECAUSE IT HASN'T BEEN FESTERING FOR LONG ENOUGH. BUT IF I CAN SOLVE THAT AND BRING A WATER EXPERT LIKE CHARLES PERRY INTO THE ROOM TO GET THAT DONE, I CERTAINLY WOULD LIKE TO FACILITATE THAT. BUT IT DOES HIGHLIGHT SOMETHING THAT WE'RE FACING AS WE GROW AND MATURE AS A STATE. YOU HAVE FUNDAMENTAL PRINCIPLES, PROPERTY RIGHTS, CONTRACTUAL RIGHTS, RIGHTS OF EMINENT a state you have fundamental principles uh property rights contractual rights rights of eminent domain uh that are going to step on each other all over the place uh so something that's

specific i'd be hesitant to get into a policy proposal up here um today uh but stay tuned i i would add to that marvin nichols is part of our state water planning. It produces 279,000 acre feet for that region to use. If the legislature votes on my plan and we're successful in the things included in that plan, we will give an alternative to Marvin Nichols Reservoir that will produce 300,000 plus acre feet for that regional use and will not have the property rights conversations now I'm not and there we go I'm not saying you should drop Marvin Nichols are not drop my news and as I've questioned as I travel the state in the country and globally the last few years on water don't quit doing what you're doing until the voters have spoken November nothing's

changed but that said Marvin Nichols is a great example of one we're behind our state water plant had four reservoirs online to come online we have 22 to develop for those were supposed to deliver water to Texans in 2020 they have not started their federal or state permitting or eminent domain conversations and it takes a minimum of 30 years to bring a reservoir online when you start so that's just a good example where we thought we were in get for me an acre feet of water from reservoirs and four of the reservoirs that were delivering water in 20 you haven't even began that's what I say our own plan tells the story. It doesn't have to be creative. So Marvin Nichols,

and I was in trouble because I was on Dallas Politics or something and I made the comment. I was going to ask you about that. You are. I made a comment and probably shouldn't have done it in hindsight, but it was the truth. Marvin Nichols is an eminent domain purgatory. But that is a very much a clear sign of things to come when we go to trying to take property rights to move water supply into conversation. So I tell those folks forever, we've been having these conversations for years, don't quit doing what you're doing.

But there's a legitimate opportunity possibly coming down the way that they don't need the water today. We've got a little time. So we may be able to mitigate the Marvin Nichols of the state. There's several of those like that. Representative Trax Clare, I remember when you first ran for office, you talked about this water issue in Central Texas. What are the needs that are specific to this part of the state on water? Central, I mean, you, again, you, you drive anywhere around here and

you can see it with your own eyes. I think that we have come to a crisis point when you realize there was a, there was a time where the conflict around Lake Travis, for example, was, oh, you know, you just want a bunch of water for recreational use. You know, it's just a bunch of people out there who want to, who want a lake to get out on their boats. And now people are starting to realize that we are depending on that lake for our drinking water when you turn on the tap. Um, and so it's changed the dynamic and I really think we have gotten to a crisis point of of that realization But I mean gosh you drive even further west and you go over the perdon alice and that's

Continued to be dry for for a long time you go to the highland lakes and you see that a lot of those that water Is being sent You know down to down to south Texas for their agriculture needs down there. And, you know, a lot of fights going on about, you know, the right direction for LCRA and how we manage the decisions about who gets what water. And I just think it's coming to an absolute boiling point. And so I am a low tax, you know, I am all for everything we can do to reduce our property taxes and to make it more affordable to live in our state. At the same time, we have to recognize that it's kind of now or never at this point.

And so, yeah, and then as you go further west, like I said, so many people are depending on their wells that have gone dry. I've experienced that myself personally. So there is, I think, a united... One thing that's interesting is it's like Republican or Democrat, right? Like of all the partisan issues that we deal with, I feel like water is the one thing that we can all sit on this stage and say, yeah, we're going to. We like water.

We all recognize that we are depending on it. And of all the things that go on at the state capitol, this is one where it's not a partisan issue or a divisive issue. It's just what is the quickest, most effective, smartest way to get this done. And honestly, Senator Perry has done a wonderful job in being a leader on that issue. And I hope once the House gets itself settled and we have committees and all that,

we'll have a little bit more clarity of what that process looks like in the House. But I'm a founding member of the Water Caucus, and I plan on filing a slew of water bills myself, including one of the things that my district is dealing with is that we are near the high growth areas, right? So Laga Vista, for example, a small town, but right outside of Austin City limits. And so one of the bills that I'm filing is to make sure that the Water Development Board gives extra consideration for small communities that do not have the tax base to invest in large infrastructure projects,

that if they're within 50 miles of a high growth area, that they get extra consideration for state grant funds because we have to change the paradigm of being forward thinking and being proactive. And again, we're in a situation where we still have a lot of catch up to do, but we should also be thinking, what are we doing for the communities like Lago Vista

who know, they see it, they see the growth, they see, you know, it's, they see it, they see the growth, they see, they, you know, it's like the, they see it coming right at them. Um, and yet they don't feel the local leaders don't feel like they have the tools that they need to really provide for, um, for the coming growth. So just, I want to be an advocate to, for, for being more proactive on, um, a community-based level. There you have it. If there's one takeaway for this panel, it's water is a problem. Senator Johnson, let's shift gears to the power grid. You and I spoke on a panel like this two years ago, and that was before all the ERCOT market reforms,

after all the physical reforms. What do you think of how they have since been implemented the market reforms, the tweaks to ERCOT that were adopted last session? I think a lot of great work has been done. And by the way, being here two years ago was so much fun, I came back. The conversations we've had. You bet. The projected growth on the grid has rendered what we've done so far with market reforms and other things much more important, but in some ways irrelevant.

We've been trying to fix the problems that we all experienced during URI when everything froze and people died and we lost hundreds of billions of dollars. And I think we've done actually a pretty solid job on protecting ourselves against the catastrophic damages. But what remained, what's much more difficult to do is how do you set, how do you fix a market? We all believe in free markets, but we do structure them. How do you create the right incentives to bring on the power that you need for the cost that you need it at the time that you need it, right? And we've worked very hard with that, and I've never seen so many people with so much expertise disagree so intensely with each other than in this issue and somehow through all of that you trust a bunch of legislators

Who don't really experts in anything except occasionally accounting? Who then be try to become experts in certain areas and and you know, we certainly have senator Perry as a leader in water I've spent a lot of time in electricity But we're still relying on our own judgment about competing expert views. Given all of that, I think we've done a pretty good job at setting up this market. We are seeing new generation come online, but almost more important than anything we've done in government reforms is the changes in the coming load growth that will implicate water, that will

implicate transportation and education and housing, because we're looking at hundreds of thousands of jobs and possibly doubling the total electrical demand on our grid in the next five years. Now, that is a sci-fi scenario. No one can really come close to it. But we do have to start planning immediately this session. I think the issue this transportation, this session, as far as the grid is concerned, is not market reforms. We've been tweaking it enough. We need to let it work. Any more tweaking

on that and we're probably going to cause damage. Let's let some things play out. But we're going to need transmission. We're going to need to manage the new generation. We're going to need to make sure that if there's load growth next to a community, that it's not so loud that it's driving you out of your homes, that it's not creating so much additional demand on the electrical grid, that your costs are going to go through the roof, and that you're not taking your taxes and subsidizing the profits of a company that comes in to set up an AI data center or to electrify the Permian Basin. So it continues to be a highly dynamic, highly exciting area where, again, Texas probably has the best position on Earth to lead the way in new generation of electricity and the technological progress

that comes along with the coming age of AI, as well as regulating the downsides of AI. News as of yesterday, a new Chinese AI platform called DeepSeek showed up and announced some results. And it shook the world up, and you saw a stock drop in Nvidia chips. And as we sit here and plan to build out a grid for 50, 60 gigawatts of new electrical demand due to AI data centers and announcements of a $500 billion Stargate plan, this little startup company shows up and says, we're using one-eighth of the chips and an eighth of the power. Think how hard our job is. Feel sorry for us, please, because we're trying to design for the future, but the future is changing so quick. I don't think that's a winning message.

Probably not. And that's where, frankly, I hate to use the word, but I'm kind of conservative in our approach to these things. Because once you commit down a path, if the world changes under your feet, then what do you do? So I take our jobs very seriously, and we consult with people and try to work together to put us in the best position to avail of the opportunities we have without making going so far down a wrong turn that we've now misspent our resources. Any thoughts on market reforms or anything else? Well, I would be remiss if I didn't at least mention that 40% of our grid

is currently not dispatchable energy. It's renewable energy, it's wind, it's solar, and the sun doesn't always shine and the wind isn't always blowing, especially in the critical times. So while we have made incredible increases in the amount of megawatts that we have, I mean, if we had the energy that we had now back when Yuri happened, we would have been able to cover it. But the people who are coming to Texas, I think you mentioned data centers, Bitcoin, I mean, all these things. In addition to just the number of people moving here every day, I think. Manufacturing, onshoring, and the electrification of the oil and gas industry.

All major drivers of load growth. So we have to get to a place where we have dispatchable, reliable, on-demand energy that when we need it most, that is there. And I think that the market distortion, you know, that subsidies, federal subsidies had a lot to do with the initial market distortion, that we didn't have investments in nuclear and other reliable forms of energy in the times that in the previous five years before URI. And we dealt with the consequences of that. Right. So I'm interested to see what happens at the federal level now under a new Trump administration and that that hopefully is pro-oil and gas. And, you know, we have a lot of good American energy that's going to provide for the people of Texas,

and we just have to make sure that we are not creating a market where we are continually incentivizing energy that may not be there when we need it most. And I see... Now we've And I see, I know. Well, go ahead. I mean, I do, I want to talk about battery storage quickly, but after I hear. I actually think there's going to be a whole lot of areas where Ellen and I completely agree.

What I think it is important, I think it's important we're honest with ourselves, that all this cheap renewable energy really was cheap and it did distort the markets, and it was the federal government. It was the federal government under George Bush, Barack Obama, Donald Trump, and Joe Biden. They've been pumping money into renewable energy for decades, and Texas enjoyed it in the form of low prices, and all of us got, especially industry, was addicted to the low price of renewable electricity

and disregarded the fact that it's not there when the sun's not shining and the wind isn't blowing. And we could have at any time, particularly since 2011, when we had a big freeze, create a market which paid more for a dispatchable electron, usually gas fired, than for a less reliable electron. We could have done that. That's not a Democrat thing, Republican thing. We enjoyed the cheap electricity and then we did pay the price. I totally agree. We need reliable dispatchable generation But we also need all of that renewable energy because this coming load growth cannot possibly be met with gas fired generation There's not enough parts on planet earth or enough workers to install the stuff So I think I think Ellen you want to talk about batteries, and I think it's a great idea to talk about batteries because go ahead.

Because it's kind of a bridge between our two messages, really. Well, I mean, because sometimes you say, oh, well, now we're going to have battery storage, and that's going to solve the problem because then you can store the energy from the wind generation and dispatch it when you have. Well, in reality, the amount of energy that those battery facilities can store the energy from the wind generation and dispatch it when you have. Well, in reality, the amount of energy that those battery facilities can store is absolutely minuscule. And it is not possible to build enough of that stuff,

even if we wanted to, to really fill the gap that we have. And again, in talking about kind of growing pains and rural versus urban divides, people should know that these battery storage facilities that are often owned by, you know, foreign, foreign companies are coming in to rural communities in Texas without the public safety infrastructure to respond to an emergency. So you have tiny little towns that now have, you know, one, two, three, multiple battery storage facilities going in. They have a volunteer fire department that is not equipped to respond to, you know, if the thing goes up in smoke, which happened, which does happen recently happened in California just a few days

ago, um, on a dead end road where, where residents will be trapped if they're again, if there is an emergency, there's no egress. And so another bill that I have filed and have gotten some pushback from the, from the green, you know, energy side of things is a bill to just make sure that those things are going in the right. I mean, we can talk about subsidies and we can talk about, but at the very least, we have a responsibility as policymakers to make sure that communities and residents have basic public safety protections. And so the bill simply says it's a new permit through the PUC, and it allows them to take in consideration location requirements.

And so I've gotten you know, lots of media calls. Oh, you're anti-grid You know, you're gonna you're gonna that you are going against I even had one say well You're going against directly against the governor and I was like, oh why I am I didn't know You know because he wants to he wants to beef up the grid and it's like well There's a lot of ways to beef up the grid and let me tell you that battery storage is is probably not going to do it for us so there will be that is one of my absolute priorities this session because i have several communities um in in rural texas then they want to they have been absolutely blindsided and we don't really have tools at the state level to help them navigate to help us navigate where the right places are um a broad range of energy supply of generation, but specifically battery storage has become a bigger and bigger issue. Senator Perry, the thing that

hasn't really been discussed as much yet are nukes. It seems like the industry believes this is a game changer. Is it really though? Well, unfortunately, it would become integrated into the nuclear conversation. What I've discovered is they're not snakehole salesmen, but there are a lot of misinformation out there. And if you don't ask the right questions, you get their answer, which is not the right answer. So specifically, if I were to tell you there's only one technology in one company that will deliver a small module reactor, which is the new platform for nuclear energy before 2030, possibly. There's only one in the state of Texas. There's one in Tennessee, maybe.

And that's it. There's technologies out there that are walk away safe now. They don't have the big domes because they don't have the fear of pressurized nuclear lines pushing radioactivity into the atmosphere that travels the earth 50 times when it gets loose. There are some of those companies pushing that technology, branded to look a little different and sound better, but it's still light water pressure reactor lines and that's not where we need to move to but they have garnered the attention because they're mega companies they're big footprints they have a history of doing some of these in the past the new

stuff the walk away safe stuff the molten salt reactors there's some other technologies are out there that are not near as possibly damaging to the earth and people that surround it because they have no pressure in the line. So that's the first question you ask a company. Are you pressurized water? Are you a light water reactor with pressurized lines? Because you're getting the same technology that had the issues of the past that people ran from nuclear for decades. So the one company that I'm familiar with is in my district. Abilene Christian University of all places has a bay.

They are constructing an SMR modular, a small modular reactor today. It should be ready for deployment commercially by 30. The state has not put any money into that project because it's a private university. That being being said they have

partnered with a m texas tech ut and georgia to get to this point they are way past a an idea they have gotten a construction permit from the feds they need i think rightfully so, $125 million to get the demonstration reactor completed. The investor capital to this point is still out there, but it's not near as lucrative because people are beginning to go, we're into this pretty deep. So at what point in the session are we going to have the conversation, at what point does the state stand a little risk to potentially be a game changer and own the nuclear energy field of this country. Somebody's got to own nuclear. Texas is positioned best to do it. That particular reactor demonstration

is completed in 18 months. They start running it, monitoring it, and the commercial reactor is being built parallel to it. They have to name the deployment of that SMR modular in 25 where they're going to put it. Federal requires a deployment site so that they can vet it. I'm asking for it to go into the Permian Basin to go on a produced water desal system. Five megawatts of the 100-megawatt production would be for desal. Ninety-five megawatts would be for industry consumption. As Senator Johnson said, the industry, the oil and gas industry,

has said we need gigawatts of power to develop the fields that we're sitting on over the next 50 years. We can't get there. The future of energy is customer-centric. What do I mean by that? An AI center is going to have its own power source. The oil and gas industry will have their own power sources. The chip manufacturers will put one of these SMRs on their side or have a gas generation on their side. So the grid's not going to build out in a way that all these new industries and ideas coming to Texas are going to

plug into it. On the contrary, they're probably going to do their own thing because their private sector, they're into making money. And the quicker they can get up and running, the better they are, and they need a reliable source. And actually, it benefits Texas because actually they'll become a generator, possibly. But they also insulate the grid from cybersecurity issues in the sense that that's just one more animal on the grid that we don't have to worry about being hacked. It'll be a private, isolated event. So lots of things, but I caution nuclear.

I had this conversation with the lieutenant governor. If someone comes to you and says, you need to help me with nuclear, you need to ask them the first question, when are you going to be commercially deployable? And if they're honest, they're going to say 15 to 20 years. Some may say 10 to 12 and get there, but you've got to kind of carve down Nicolaire to where the real players today are, and then you can get involved, and I think Texas needs to think about

risk sharing at this stage, not before they've got their federal permit, not before they've got the facility to build it in. That's where these guys are. They're building the facility, but they need a little money to get over the demonstration and then the commercial will come because they will have purchase power contracts to go to the bank to build out that reactor. 100 megawatts of power, it's a modular, it fits on the back of a semi. 250 megawatts of thermal. What does that mean? Thermal is where you desal. You will become destilling water, which takes a lot of the membrane stuff out of the equation. That's where your challenge is with membranes with 125,000 parts per solid,

trying to go through it. We have to develop the produced water and oil and gas because that is the issue that's causing earthquakes in the injection site. The industry needs us to solve that problem. It just happens to produce 500,000 potential acre feet of water supply for that area. So it's a twofer What's really cool is some of the stuff's coming together and in some ways the problems are solving themselves When senator Perry is talking about these data centers and other people putting their own power on site it can actually bridge some of that problem with the

the intermittent power sources of solar, wind, and possibly other intermittent sources. Because what you have is this site that's drawing a gigawatt of power off of all this renewable fleet, and the sun goes down. They flip on their gas-fired generation, run that for a little while. Or if during the day there's cloud cover, they can spark up their engines and supplement the grid so we actually see load growth stabilizing the grid if we manage it well as far as the concerns that Ellen was expressing about the batteries I totally agree I think we

need to take the same attitude towards battery deployments AI data centers pipelines petrochemical refining plants I I mean, all these things blow up, catch on fire, create eyesores, smells. I do think we ought to impose the same standards on any kind of renewable fleet or any kind of new technology that we do on the old technology. But we should indeed recognize that people live here. We're not just creating power. We're creating power so that we can turn on lights and live here. And if it's making our lives miserable, we do need a regulatory and legislative approach to those things

I'm looking for a Senate sponsor See me after the class Last topic I want to touch on you just mentioned it housing people coming to live here I mean, that's the most basic aspect of this, right? I just saw a headline from, I think, the Statesman the other day that apartment rates are actually dropping for the first time in a long time. Imagine hearing that a couple of years ago in Austin. Senator Johnson, what do you think about that? Is that something that we just wait on supply and demand to get matched up? No, no, no.

I've been talking with developers for a long time. And what they'll tell you is that markets will not produce the housing that we're lacking here in Texas. You know, at the high end, you can make a ton of money off of selling expensive housing. So there's no real problem with the market producing that. At the low end, we have cooperation between local governments and the federal government putting subsidies in there. And we can talk about those two things if you want to. But what's clearly missing is the middle market. Right. Everybody is afraid to do anything for the middle market because we think it should solve itself.

But it really doesn't. And I've talked to major developers around the state. And like, yeah, we're not building that. And the reason is it's expensive to get what's called mezzanine financing. We are talking about the people who come work at all this new industrial production that's coming to Texas for onshoring or electrification of the oil and gas or the burgeoning tech industry, the people who are moving here. Great. We're going to take advantage of all the advantages of Texas, but they've got nowhere to go. And these are people at average income. They can't afford to rent anything or buy anything. So what they're doing is scooping up cheap places that should be cheap, driving the rents up, which means the people who can't afford more can't afford that. They're homeless or live in three families into

an apartment, and there's still not enough for middle income. So the market will not solve that problem because the profit margins just aren't there. And the reason is something called mezzanine financing. If you have a project that costs $100, a bank will lend you 60 bucks. And if a project goes bust, they sell the place, they foreclose, and they get their 60 bucks back. Cool. What about the other $40? Equity piece comes in, they're willing to risk about $10 of their own money, the rest they want to finance. That middle tier of money is what's so expensive to get. I'll go really fast here. I see a sign up there. That can be like 17%. The state could take the same approach to housing

that it took to dispatchable gas-fired energy generation last session, where we created a big multi-billion dollar fund, provided a low interest rate for that mid-tier financing that makes building more attractive. So you get the private market coming in, building housing simply with a financing mechanism. And we as taxpayers actually get a higher rate of return

than we are with that money sitting in our bank accounts. I think that could pull several hundred thousand new housing units online, bring rent prices down for the lower income levels and provide places to live for all those new jobs that we're creating here. Oh, and I have a bill for that. Be filing it tomorrow.

You might have a sponsor too. No, I'm looking for a house sponsor. I don't know about that one, but we'll, we'll, we'll talk. We'll talk more after anything on housing. Oh, real quick, but yeah. Well, I would just say it's, it's not just housing for housing sake. Again, in the place that produces our food, you know, rural Texas, we have ranches that are being sold to developers and broken up into tiny little plots that are, you know, outside city limits. And while zoning authority for county commissioners, you know, may not be a palatable solution, like we do have to make sure that development is done because you can't put a thousand homes in, practice, require developers to prove that they have sustainable water supply for 50 years and go through the county and have that approved and proven before they get their subdivision approved. tools in the toolbox just to make sure, I mean, to make sure that as we are growing, we are doing so

at a pace that we can keep up with. Because all these problems that we just talked about are not going to get solved if we just go out and put a bunch of high density housing in rural communities that don't have the infrastructure to support it. So finding that balance, working with county commissioners in particular to make sure that they feel like they have the tools that they need to follow up on water in particular. So yep, that's what I would say is let's make sure that we don't do it in a collaborative way. Your answer there made me want to bring up municipal utility districts, but we're not going to open

that can of worms. That's Growing Pains. Thank you all to our panelists. We really appreciate you coming, and we hope you enjoyed it. Thank you. I'm out.