By Uher H.B. No. 1432
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the powers of a river authority that engages in the
1-3 distribution and sale of electric energy; granting the authority to
1-4 issue bonds.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 245, Acts of the 67th Legislature,
1-7 Regular Session, 1981 (Article 717p, Vernon's Texas Civil
1-8 Statutes), is amended by adding Sections 4A and 4B to read as
1-9 follows:
1-10 Sec. 4A. (a) The board of directors of a river authority
1-11 that is engaged in the distribution and sale of electric energy to
1-12 the public may create by order one or more nonprofit corporations
1-13 to act on behalf of the authority as its duly constituted authority
1-14 and instrumentality to exercise any power of the authority under
1-15 law except a power relating to solid waste management activities or
1-16 activities as an "exempt wholesale generator" as defined by the
1-17 Public Utility Holding Company Act of 1935 (15 U.S.C. Section
1-18 79z-5a(a)), but including the authority to acquire, develop,
1-19 operate, and sell fuel, fuel reserves, and mineral interests.
1-20 (b) When exercising a power under this Act, a corporation
1-21 created under this Act and the board of directors of the
1-22 corporation have the same powers as the creating river authority
1-23 and the authority's board.
1-24 (c) The board of directors of the authority shall appoint
2-1 the directors of a nonprofit corporation created under this
2-2 section. A member of the authority's board of directors may serve
2-3 as a member of the nonprofit corporation's board. The
2-4 corporation's directors serve at the will of the authority's
2-5 directors.
2-6 (d) The budget of a nonprofit corporation created under this
2-7 section must be approved by the board of directors of the
2-8 authority. The activities of the corporation are subject to the
2-9 continuing review and supervision of the authority's board of
2-10 directors.
2-11 (e) The Texas Non-Profit Corporation Act (Article 1396-1.01
2-12 et seq., Vernon's Texas Civil Statutes) and its subsequent
2-13 amendments apply to and govern a corporation created under this
2-14 section. Sections 5-20 and 33-36, Development Corporation Act of
2-15 1979 (Article 5190.6, Vernon's Texas Civil Statutes), and their
2-16 subsequent amendments apply to and govern a corporation created
2-17 under this section, except that a reference in those sections to an
2-18 Act includes this Act, as appropriate, and a reference to a unit
2-19 includes a river authority to which this Act applies.
2-20 (f) The property of a nonprofit corporation created under
2-21 this section is not exempt from taxes and special assessments of
2-22 the state or of a municipality, county, or other political
2-23 subdivision of the state.
2-24 (g) The board of directors of the nonprofit corporation may
2-25 issue bonds or other obligations or otherwise borrow money on
2-26 behalf of the river authority to carry out any of its corporate
2-27 purposes. The issuance of any bonds or obligations must be
3-1 approved by the board of directors of the river authority. Bonds
3-2 and other obligations issued or entered into by the nonprofit
3-3 corporation and the proceedings authorizing the issuance or the
3-4 entering into of an obligation shall be submitted to the attorney
3-5 general for examination. If the attorney general finds that the
3-6 bonds or other obligations have been authorized in accordance with
3-7 the Texas Constitution and this Act, the attorney general shall
3-8 approve them, and they shall be registered by the comptroller.
3-9 After approval and registration the bonds and obligations are
3-10 incontestable in any court or other forum for any reason and are
3-11 valid and binding obligations in accordance with their terms for
3-12 all purposes.
3-13 (h) In addition to other authority granted by this Act, the
3-14 board of directors of the nonprofit corporation may exercise the
3-15 powers granted to the governing body of an issuer and a public
3-16 agency with regard to the issuance of obligations under Chapter
3-17 656, Acts of the 68th Legislature, Regular Session, 1983 (Article
3-18 717q, Vernon's Texas Civil Statutes), Chapter 3, Acts of the 61st
3-19 Legislature, Regular Session, 1969 (Article 717k-2, Vernon's Texas
3-20 Civil Statutes), and Chapter 845, Acts of the 67th Legislature,
3-21 Regular Session, 1981 (Article 717k-6, Vernon's Texas Civil
3-22 Statutes), and their subsequent amendments.
3-23 Sec. 4B. (a) A river authority that is engaged in the
3-24 distribution and sale of electric energy to the public or a
3-25 corporation created under Section 4A of this Act may enter into a
3-26 hedging contract and related security and insurance agreements in
3-27 relation to crude oil, fuel oil, natural gas, and electric energy
4-1 to protect against loss due to price fluctuations. A hedging
4-2 transaction must comply with the regulations of the Commodity
4-3 Futures Trading Commission and the Securities and Exchange
4-4 Commission.
4-5 (b) A payment made by a river authority or a nonprofit
4-6 corporation under a hedging contract or related agreement in
4-7 relation to fuel supplies or fuel reserves constitutes a fuel
4-8 expense, and the authority or nonprofit corporation may credit any
4-9 amounts it receives under the contract or agreement against fuel
4-10 expenses.
4-11 (c) Except as provided by Subsection (d) of this section,
4-12 the board of directors of a river authority may determine and
4-13 designate the amount of money to be invested in a hedging
4-14 transaction.
4-15 (d) The directors of the river authority by formal policy
4-16 shall regulate the investment of funds in crude oil, fuel oil,
4-17 natural gas, and electric energy futures contracts or in options on
4-18 those futures contracts. The policy must provide restrictions and
4-19 procedures for making the investments that a person of ordinary
4-20 prudence, discretion, and intelligence, exercising the judgment and
4-21 care under the circumstances then prevailing, would follow in the
4-22 management of the person's own affairs, not in regard to
4-23 speculation but in regard to the permanent disposition of the
4-24 person's funds, considering the probable income as well as the
4-25 probable safety of the person's capital. The investment may be
4-26 made only for hedging purposes.
4-27 (e) In this section, "hedging" means the buying and selling
5-1 of crude oil, fuel oil, natural gas, and electric energy futures or
5-2 options or similar contracts on those commodity futures as a
5-3 protection against loss due to price fluctuation.
5-4 SECTION 2. The importance of this legislation and the
5-5 crowded condition of the calendars in both houses create an
5-6 emergency and an imperative public necessity that the
5-7 constitutional rule requiring bills to be read on three several
5-8 days in each house be suspended, and this rule is hereby suspended,
5-9 and that this Act take effect and be in force from and after its
5-10 passage, and it is so enacted.