May 10

The Texas Legislative Update with David Blackmon and Jason Modglin, President of TAEP.

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The Texas Legislative Update with David Blackmon and Jason Modglin, President of TAEP.

[Follow us on Twitter at @JasonModglin and @EnergyAbsurdity]

In Episode 15 of the Texas Legislative Update, David Blackmon and Texas Alliance of Energy Producers President Jason Modglin cover energy-related events in Austin for the Week ended May 5, 2023.

[Follow us on Twitter at @JasonModglin @TexasAllianceEP and @EnergyAbsurdity]

Run of Show:

Happy Cinco de Mayo, Texas!

Just 26 days remain in the legislative session for 2023

Ted Cruz attracted another formal challenger, congressman Colin Allred, who represents the 32nd district, where I live. Allred joins State Sen. Roland Gutierrez, from District 19 in San Antonio in announcing a bid for the U.S. Senate seat. It should be a vigorous Democratic primary if nothing else, right?

The Capitol was shut down for awhile Tuesday due to a rowdy transgender protest. Did it impact what you were doing?

Chapter 313 Replacement – we talked about this last week. A replacement bill overwhelmingly passed HB 5 this week. Is it a good bill?

Where does the property tax cut battle stand?

Any movement on grid-related bills? – SB 2627, SJR 93 by Sen. Charles Schwertner were fast-tracked in the Senate this week, will likely come up in the House next week. The new proposed legislation would incent the building of new dispatchable reserve thermal capacity through property tax incentives and completion bonuses.

Preview of Next Week

End

[Follow us on Twitter at @EnergyAbsurdity and @IPAAaccess]

IPAA is one of the industry’s oldest and most effective national trade associations, representing mainly the interests of small to mid-size independent producers.

 

 

 

The Texas Legislative Update with David Blackmon and Jason Modglin, President of TAEP.

 

David Blackmon [00:00:02] Hey, Welcome to the Texas Legislative Update. I’m David Blackmon here with Jason module and the president of the Texas Alliance of energy Producers. Jason, how’s things in Austin right now.

Jason Modglin [00:00:15] It’s it’s busy that are working pretty full Friday the house is slated to work tomorrow the other day so we’re coming up to deadlines. May 11th is the deadline for House bills to be out of the House floor passed second reading.

Jason Modglin [00:00:34] And so they’ll basically work up until midnight on Thursday, but basically take Sunday off. But that’s about it. We’re working now through next Thursday.

David Blackmon [00:00:47] Okay. Well, this is Episode 15, the end of the 16th week of the session. We missed one week and this is the week ended May 4th or May 5th, excuse me, Cinco de Mayo. Happy Cinco de Mayo.

Jason Modglin [00:01:03] Happy Cinco de Mayo. We can always celebrate, you know, running the French out of the Americas. So, you know, that’s.

David Blackmon [00:01:11] That’s a noble thing, right?

Jason Modglin [00:01:12] That’s a noble thing. Yeah,.

David Blackmon [00:01:14] Absolutely. Everybody have a margarita to celebrate.

Jason Modglin [00:01:17] Amen.

David Blackmon [00:01:18] Jason may need three of them after injury. So let’s get started here. I guess the first thing on the agenda I wanted to just mention is, is Ted Cruz attracted another challenger,.

David Blackmon [00:01:30] My own congressman from up here in District 32 in North Texas, a Democrat name calling all red. Representative Barra becomes the second Democrat to announce a challenge in addition to State Senator Rohan Gutierrez out of San Antonio,. Who announced a couple of weeks ago he was planning to run.

David Blackmon [00:01:52] So, you know, I guess it’ll be a vigorous primary in the Democratic Party, if nothing else, for that Senate seat.

Jason Modglin [00:01:59] That’s right. That’s right been there in Congress for several sessions and trying to either up or out.

David Blackmon [00:02:09] Yeah. Yeah. Well, you know, good for him. He’s he’s developed something of a profile I guess during this during the last year or so up there in Washington and has been out front on some issues. And you know, he certainly presents a very striking profile. He’s really good on television is his ads are great.

David Blackmon [00:02:32] And I’ve seen him speak several times and he’s really a fine public speaker. And so, you know. I. I have to. Just a personal opinion. I mean, I think he’ll be a. More credible opponent than if they just ran Beto again. Right. Anyway, anyway.

Jason Modglin [00:02:54] Absolutely.

David Blackmon [00:02:55] Enough for that political talk. Yes. We’re not here to talk about you. So nothing happened this week. Tuesday, the Capitol was actually shut down for a little while. Talk about what happened there.

Jason Modglin [00:03:08] It was shut down there was a very briefly an interruption in the House chamber so that you have a gallery that’s one floor above that kind of looks down on the House chamber.

Jason Modglin [00:03:21] And there was both supporters, but also opponents. And then they turned into protesters of a bill. Senate Bill 14 by Senator Donna Campbell related to transgender health care and the age by which that could be accessed without a parent and doctor involvement.

Jason Modglin [00:03:47] So there was a commotion, basically, and then banners were dropped from the gallery into the chamber. And so the presiding officer, the speaker of the House, is able to clear the chamber and clear the gallery.

Jason Modglin [00:04:08] And so he did that for the safety of the members there and to prevent outbursts and interruptions. But then there continued to be kind of disruptions outside the chamber. Some pushing, I guess, is the right way to describe it. And some people were arrested. Right mean some people were arrested.

Jason Modglin [00:04:34] I don’t know that there was any actual charges. But and so with that, then they opted to just kind of push the rest of the folks, have them go outside of the Capitol.

Jason Modglin [00:04:48] And shortly after that, there was a valid point of order called on the bill. And that certainly took the animosity out of the day a little bit. The bill was sent back to its respective committee, a committee, a bill analysis had to be fixed and now it’s back on the floor actually today.

Jason Modglin [00:05:14] So it’ll be up later this afternoon and kind of expecting the same thing. There’s a pretty high law enforcement in the Capitol today, but thankfully, having the able to catch office today.

Jason Modglin [00:05:30] And so sitting in an office in the Capitol and doing the podcast today, but could be the same thing this afternoon and potentially tomorrow.

David Blackmon [00:05:40] So to hear the fire alarm go off that’s that’s what it is?

Jason Modglin [00:05:44] . If the fire alarm goes off, that potentially is what is happening over the next 30 minutes or so. Yes. sir.

David Blackmon [00:05:52] Well, things do get emotional during these sessions. That’s not the first time that’s happened. The Capitol won’t be the last time, and.

Jason Modglin [00:06:00] It seems to happen on a ten-year cycle, the last time it occurred and that was related to the Wendy Davis and abortion legislation. So.

David Blackmon [00:06:11] It’s always the social issues.

Jason Modglin [00:06:13] It’s the social issues. Then when it gets hot, I think this ratchets up the ratchets everybody up. So yeah,.

David Blackmon [00:06:22] Okay. Well, let’s go on and talk about some legislation here. Chapter. You know, we talked about chapter three third team need for a replacement for that long. on our last episode and now we’ve got a replacement bill House Bill 5 was voted out of the House this week talk about what that bill will do.

Jason Modglin [00:06:43] We did. So a new property tax abatement program for capital-intensive projects. There used to be a program and but there was a lot of criticism of that program that it wasn’t as transparent. It didn’t necessarily deliver on the jobs that many lawmakers wanted to see and in those types of programs.

Jason Modglin [00:07:08] And so really, the advocates, which are a mix of oil and gas, heavy industrial manufacturing, lots of lots of business interest in the state, really said how can we continue to be competitive, particularly with the Gulf with other states in the Gulf Coast, but then across the country,.

Jason Modglin [00:07:31] Because we have such a hard property tax in this state. Other states don’t have the same method of taxation and so capital-intensive projects are taxed higher here in Texas.

Jason Modglin [00:07:46] They’re somewhat captive, but just based on our population, based on our proximity to oil and gas and the Gulf of Mexico.

Jason Modglin [00:07:57] But at the same time, when deciding where you want to invest in projects and if you can invest right next door in Louisiana and it’s zero new taxes, in some cases you’re chasing a payment or a bonus from the state and you’re looking at Texas and you’re looking at pretty hefty property taxes on that capital improvement. It’s fairly easy to see, you know, kind of where the number crunchers push project.

Jason Modglin [00:08:29] So House Bill Five by Todd Hunter out of the Corpus Christi area. It passed the House chamber yesterday. And really the advocates did a phenomenal job. They had well over 100 people vote for the measure, Republicans and Democrats.

Jason Modglin [00:08:46] It will go to the Senate and we’ll see what happens with it. I think it’s certainly part of this broader property tax discussion is how do we bring property tax relief to all Texans? Certainly, I think the highest priority on that is homeowners.

Jason Modglin [00:09:04] So so I don’t want to confuse that this is potentially in front of that lawmakers and from the lieutenant governor and the governor. But but really, it’s probably part of the mix. And how can we reduce property taxes in this state?

Jason Modglin [00:09:23] And so I imagine it’ll pass on third reading today and then be a pretty robust conversation in the Senate and between both chambers on how to see some kind of bill or some kind of program like this recreated for capital-intensive projects.

David Blackmon [00:09:43] Well, another property tax related, similar kind of abatement kind of proposal from Senator Shorter. The Senate Bill 2627, SJR93. Related to generation capacity, right?

Jason Modglin [00:10:01] That’s right. That’s right.

David Blackmon [00:10:03] Talk about that and that’s a, you know, different than Senate Bill six, but kind of a similar goal in those bills.

Jason Modglin [00:10:12] Well, you and I have lamented kind of the stalling, if you will, of a lot of the package that came over from the Senate, had to really put steel in the ground to prioritize dispatchable generation resources and find ways to incentivize that and really make it make it attractive for generators to build new dispatchable generation in the state.

Jason Modglin [00:10:43] And those bills have largely fizzled in the House. There was a House hearing this week in State Affairs and Chairman Hunter, as we just talked about on House Bill Five, asked some pretty pointed questions of the independent market monitor of ERCOT and of the Public Utility Commission. Is this bill necessary at this time, based on what you’re already implementing with the PCM?

Jason Modglin [00:11:12] And the answer was no from all three of the folks. And so that seemed to be okay. Maybe Senate Bill Seven is dead. And so, Senator Fortner, very quickly, this was actually preemptive I think he saw the writing on the wall. He said, let’s go back to the drawing board. Let’s take some concepts that have been introduced in the House and some advocates and push for a low-interest loan program and then a completion bonus if you complete in a timely manner, that project could be eligible for a completion bonus.

Jason Modglin [00:11:51] And there’s lots of dispatchable resources they also talk about small modular nuclear. That’s not necessarily in a two-year cycle, but they’re putting into statute a market signal that we want to see more nuclear resources here over the next ten years, that that can start to make a difference, particularly for some of those long lead up time periods on nuclear.

Jason Modglin [00:12:20] And so as the Senate has been able to do basically over the past decade, they can move very quickly.

Jason Modglin [00:12:29] And so this bill was introduced on Monday, Monday morning. It had a hearing on Tuesday, and it was voted out of the Senate yesterday.

Jason Modglin [00:12:41] So I imagine it will be over that in the House on Monday and potentially a pretty robust hearing on Wednesday.

Jason Modglin [00:12:51] Would that also be in state affairs?

Jason Modglin [00:12:53] It would be in state affairs if not the following week. But, you know, this might be the solution that both sides can agree on.

Jason Modglin [00:13:05] And it has an interesting kind of component with the property tax discussion is if you can apply these abatements to these types of projects, you can have a low interest loan, you can have an abatement and you potentially could have a completion bonus on top of that. That really would send a pretty clear market signal.

Jason Modglin [00:13:29] We want to see this type of generation we’re going to fast-track it. And so that not dissimilar to what we’ve seen in other states that have really said we’re coming up against some hot summers.

Jason Modglin [00:13:43] That was also an announcement from the Public Utility Commission this week that on their seasonal adjustment review, they thought it’s going to be hot this summer and that there might be some tight, tight times coming if we have wind drop off or solar drop off or we could be in for some curtailment this summer.

Jason Modglin [00:14:09]  So it’s extremely timely and I think both sides are going to act on it here pretty quickly.

David Blackmon [00:14:18] Man. That would be great. That would be great. We just need a, you know, the PCM. I don’t know anyone who thinks that’s the real answer. It’s amazing to me that that testimony was offered. But anyway, and it just would be nice to have some kind of incentive to get that steel on the ground so good for Senator Shorter.

Jason Modglin [00:14:39] Absolutely.

David Blackmon [00:14:41] So I guess, you know, it was kind of a quiet tweet from the speaker, lieutenant governor on the budget and property tax cuts. And I guess there wasn’t a lot of at least open out-in-the-open movement on any of that. Maybe there was behind the scenes, though. Yes,.

Jason Modglin [00:15:01] I think that’s the right way to think about it they are definitely negotiating pretty heavily on some of these items. Lieutenant Governor actually just penned an op-ed today in the Dallas Morning News talking about the property tax system, there are proposal out of the Senate.

Jason Modglin [00:15:21] And so it really is his high hopes that the expansion of the homestead exemption really provides the needed tax relief that he he’s trying to prioritize for homeowners in the and it has prioritized.

Jason Modglin [00:15:36] So we’ll see if that’s the type of items that kind of breaks the logjam. I don’t know if you received these or not, but I’ve received text messages from some interest group talking about former President Trump endorses the Senate tax plan.

David Blackmon [00:15:55] So I haven’t gotten that one.

Jason Modglin [00:15:58] They’re definitely kind of pulling out all the stops trying to get some advocacy on that front and negotiations back and forth between the two chambers.

Jason Modglin [00:16:09] So that that’s probably the big thing on the property tax front. Added in with some of this electricity and heavy capital project investment.

David Blackmon [00:16:22] So we got four weeks left. What’s next week looking like? We’re running out of time.

Jason Modglin [00:16:27] They are running out of time. As I mentioned, the house is buttoned up against some deadlines to get house bills off the floor. So they’ve got to do that next week.

Jason Modglin [00:16:37] So they’ll go until about midnight on Thursday. If you’ve ever been here in May, it’s always a fun time. But they work right up until midnight.

Jason Modglin [00:16:50] And then there’s always the member from El Paso say, well, it’s not midnight at an El Paso, you know, let’s go another hour and then they either play with the clock a little bit or he or they call it right there.

Jason Modglin [00:17:07] And so, yeah, it’s it’s a fun, you know, last 5 minutes because they do about 20 bills in the last 5 minutes and, you know but, uh, so that’ll be what’s, what’s coming up for them next week. As I said, they’ll work all day today, Friday, Saturday, tomorrow. This will probably be their last, the last Sunday really off and then, and then that mad dash to signing day at the end of the month

David Blackmon [00:17:40] Man, fun never ends well. It’s a good reason why these sessions are only 140 days long, right?

Jason Modglin [00:17:47] That’s right. That’s right.

David Blackmon [00:17:49] Well, anything else for the good of the order, we can get you out of there for the fire alarm sounds.

Jason Modglin [00:17:54] Well, I mentioned to you we were going to have some positive press on the Resbill.

David Blackmon [00:18:01] Oh, right.

Jason Modglin [00:18:01] It didn’t move anywhere, but we had we saw a very nice op-ed from Railroad Commissioner Jim Wright in World Oil magazine that was published this week.

Jason Modglin [00:18:15] So really a great piece by him advocating for that type of program. The advocates for that, we’ve got our work cut out for us. We need to go meet with the comptroller’s office and really kind of build this from the ground up.

Jason Modglin [00:18:30] We’ve seen it pass in North Dakota. It’s going to be a while before the Texas legislature meets again in 2025 so I would imagine other states will take a look at this and see if it’s an opportunity to really get investment back into marginal fields and try to increase production from those marginal fields.

Jason Modglin [00:18:53] We think it’s a great opportunity. But it’s going to take some R&D. This is not something that can just be plug and play off the shelf.

Jason Modglin [00:19:04] And so we’ve seen that in the past. The Texas legislature has recognized that there are some opportunities for innovation, but that they’ve got to kind of find the right sweet spot to attract that type of project to Texas.

Jason Modglin [00:19:23] So we’ll see if we can do a little work over the interim and then and then lead into 2025 with it. But one to plug Commissioner. Right. And thank him for that op-ed advocating on that type of program.

David Blackmon [00:19:37] Yeah. You know, he’s done such a great job as commissioner of all three of the commissioners really do a fine job and don’t get a lot of appreciation for it. So I’m glad you got that one actually, with anythig else?

Jason Modglin [00:19:51] Actually, you know, it’s it’s so busy here. I thought I would take about 24 hours and go to Washington, D.C. So I’m going to do that next week. You’ve certainly worked with Tim Stewart over the years.

David Blackmon [00:20:07] Oh, yeah, my favorite people.

Jason Modglin [00:20:09] There, Domestic Energy Producers Alliance. So Jerry Simmons does a great job up there and out of Oklahoma. And so they’ve got a board meeting next week. And so I’m going to fly in for that temporarily and talk about Texas, talk about some of the things we’ve been engaged in on methane tax and those regulations that are coming soon. We’re still waiting on EPA.

Jason Modglin [00:20:41] And then, you know, what we see kind of around the corner and down the road permitting reform. I’m glad you’re banging away on that. We had the Republican bill that was filed this week and Senator Manchin supposed to drop his very, very soon, if not already today. So I’m excited to see that conversation be taken back up.

Jason Modglin [00:21:07] We need that takeaway conversation happening to benefit the Permian Basin and other parts of the state, that LNG has become a great tool for the rest of the world to meet their needs in the absence of, let’s say, legal energy from Russia.

David Blackmon [00:21:30] I know it’s coming,.

Jason Modglin [00:21:32] But hopefully it comes with lots of strings and penalties attached to it. But that Texas LNG has really been a godsend to Europe and Africa and Asia and all parts in between. So certainly.

[00:21:49] Just one more part of the energy space that Texas leads the world in. Right?

[00:21:54] Absolutely. Absolutely. So great. I guess it was a meme from Texas earlier this week that we’re up to 40 countries that are receiving Texas LNG. I think during the Trump administration, Secretary Perry was always pretty keen to plug 33 countries on six continents that are receiving Texas LNG. So that’s phenomenal that we continue to grow over there.

David Blackmon [00:22:25] Well, we had that big FERC permitting decision on the Rio Grande LNG project last week, and that’s a big deal. That’s going to be huge. But I mean, they’re going to open three trains at the outset. The first first domestic LNG plant to start production with three trains. Just amazing growth.

David Blackmon [00:22:48] And I say this is so key to the whole energy picture in the United States, and I don’t know that we appreciate it enough, frankly. Well, you know, we don’t. And so,. I mean, I know our state government does. I don’t know that the rest of the country appreciates it.

Jason Modglin [00:23:06] Those New Yorkers don’t. That’s for sure. I like bacon this week, so. Holy cow. Bad for him. Good for the charcoal business, I guess.

David Blackmon [00:23:19] I guess so. I guess so. I mean, they’re going to have to burn something, right?

Jason Modglin [00:23:23] That’s right. That’s right.

David Blackmon [00:23:25] Anyway, well, man, it’s always great catching up with you. I hope you have a good weekend. I hope you have a weekend at all.

Jason Modglin [00:23:32] Spend Saturday here, but then Sunday with the family. So it’ll be a good weekend.

David Blackmon [00:23:38] Always nice to catch up with family. Well, thanks, everyone, for joining us. We’ll catch up with you again this time next week. And I hope everyone enjoys Cinco de Mayo.

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