73R9452 DWS-F By Uher H.B. No. 1432 Substitute the following for H.B. No. 1432: By Holzheauser C.S.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, 1-16 but including the authority to acquire, develop, operate, and sell 1-17 fuel, fuel reserves, and mineral interests. 1-18 (b) When exercising a power under this Act, a corporation 1-19 created under this Act and the board of directors of the 1-20 corporation have the same powers as the creating river authority 1-21 and the authority's board. 1-22 (c) The board of directors of the authority shall appoint 1-23 the directors of a nonprofit corporation created under this 1-24 section. A member of the authority's board of directors may serve 2-1 as a member of the nonprofit corporation's board. The 2-2 corporation's directors serve at the will of the authority's 2-3 directors. 2-4 (d) The budget of a nonprofit corporation created under this 2-5 section must be approved by the board of directors of the 2-6 authority. The activities of the corporation are subject to the 2-7 continuing review and supervision of the authority's board of 2-8 directors. 2-9 (e) The Texas Non-Profit Corporation Act (Article 1396-1.01 2-10 et seq., Vernon's Texas Civil Statutes) and its subsequent 2-11 amendments apply to and govern a corporation created under this 2-12 section. Sections 5-20 and 33-36, Development Corporation Act of 2-13 1979 (Article 5190.6, Vernon's Texas Civil Statutes), and their 2-14 subsequent amendments apply to and govern a corporation created 2-15 under this section, except that a reference in those sections to an 2-16 Act includes this Act, as appropriate, and a reference to a unit 2-17 includes a river authority to which this Act applies. 2-18 (f) The property of a nonprofit corporation created under 2-19 this section is not exempt from taxes and special assessments of 2-20 the state or of a municipality, county, or other political 2-21 subdivision of the state. 2-22 (g) The board of directors of the nonprofit corporation may 2-23 issue bonds or other obligations or otherwise borrow money on 2-24 behalf of the river authority to carry out any of its corporate 2-25 purposes. The issuance of any bonds or obligations must be 2-26 approved by the board of directors of the river authority. Bonds 2-27 and other obligations issued or entered into by the nonprofit 3-1 corporation and the proceedings authorizing the issuance or the 3-2 entering into of an obligation shall be submitted to the attorney 3-3 general for examination. If the attorney general finds that the 3-4 bonds or other obligations have been authorized in accordance with 3-5 the Texas Constitution and this Act, the attorney general shall 3-6 approve them, and they shall be registered by the comptroller. 3-7 After approval and registration the bonds and obligations are 3-8 incontestable in any court or other forum for any reason and are 3-9 valid and binding obligations in accordance with their terms for 3-10 all purposes. 3-11 (h) In addition to other authority granted by this Act, the 3-12 board of directors of the nonprofit corporation may exercise the 3-13 powers granted to the governing body of an issuer and a public 3-14 agency with regard to the issuance of obligations under Chapter 3-15 656, Acts of the 68th Legislature, Regular Session, 1983 (Article 3-16 717q, Vernon's Texas Civil Statutes), Chapter 3, Acts of the 61st 3-17 Legislature, Regular Session, 1969 (Article 717k-2, Vernon's Texas 3-18 Civil Statutes), and Chapter 845, Acts of the 67th Legislature, 3-19 Regular Session, 1981 (Article 717k-6, Vernon's Texas Civil 3-20 Statutes), and their subsequent amendments. 3-21 Sec. 4B. (a) A river authority that is engaged in the 3-22 distribution and sale of electric energy to the public or a 3-23 corporation created under Section 4A of this Act may enter into a 3-24 hedging contract and related security and insurance agreements in 3-25 relation to crude oil, fuel oil, natural gas, and electric energy 3-26 to protect against loss due to price fluctuations. A hedging 3-27 transaction must comply with the regulations of the Commodity 4-1 Futures Trading Commission and the Securities and Exchange 4-2 Commission. 4-3 (b) A payment made by a river authority or a nonprofit 4-4 corporation under a hedging contract or related agreement in 4-5 relation to fuel supplies or fuel reserves constitutes a fuel 4-6 expense, and the authority or nonprofit corporation may credit any 4-7 amounts it receives under the contract or agreement against fuel 4-8 expenses. 4-9 (c) Except as provided by Subsection (d) of this section, 4-10 the board of directors of a river authority may determine and 4-11 designate the amount of money to be invested in a hedging 4-12 transaction. 4-13 (d) The directors of the river authority by formal policy 4-14 shall regulate the investment of funds in crude oil, fuel oil, 4-15 natural gas, and electric energy futures contracts or in options on 4-16 those futures contracts. The policy must provide restrictions and 4-17 procedures for making the investments that a person of ordinary 4-18 prudence, discretion, and intelligence, exercising the judgment and 4-19 care under the circumstances then prevailing, would follow in the 4-20 management of the person's own affairs, not in regard to 4-21 speculation but in regard to the permanent disposition of the 4-22 person's funds, considering the probable income as well as the 4-23 probable safety of the person's capital. The investment may be 4-24 made only for hedging purposes. 4-25 (e) In this section, "hedging" means the buying and selling 4-26 of crude oil, fuel oil, natural gas, and electric energy futures or 4-27 options or similar contracts on those commodity futures as a 5-1 protection against loss due to price fluctuation. 5-2 SECTION 2. The importance of this legislation and the 5-3 crowded condition of the calendars in both houses create an 5-4 emergency and an imperative public necessity that the 5-5 constitutional rule requiring bills to be read on three several 5-6 days in each house be suspended, and this rule is hereby suspended, 5-7 and that this Act take effect and be in force from and after its 5-8 passage, and it is so enacted.