By: Uher H.B. No. 1432
73R4495 CBH-F
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.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 245, Acts of the 67th Legislature,
1-6 Regular Session, 1981 (Article 717p, Vernon's Texas Civil
1-7 Statutes), is amended by adding Sections 4A and 4B to read as
1-8 follows:
1-9 Sec. 4A. (a) The board of directors of a river authority
1-10 that is engaged in the distribution and sale of electric energy to
1-11 the public may create by order one or more nonprofit corporations
1-12 to act on behalf of the authority and to exercise any power of the
1-13 authority under law, including the authority to acquire, develop,
1-14 operate, and sell fuel, fuel reserves, and mineral interests.
1-15 (b) When exercising a power under this Act, a corporation
1-16 created under this Act and the board of directors of the
1-17 corporation have the same powers as the creating river authority
1-18 and the authority's board.
1-19 (c) The board of directors of the authority shall appoint
1-20 the directors of a nonprofit corporation created under this
1-21 section. A member of the authority's board of directors may serve
1-22 as a member of the nonprofit corporation's board. The
1-23 corporation's directors serve at the will of the authority's
1-24 directors.
2-1 (d) The budget of a nonprofit corporation created under this
2-2 section must be approved by the board of directors of the
2-3 authority. The activities of the corporation are subject to the
2-4 continuing review and supervision of the authority's board of
2-5 directors.
2-6 (e) A nonprofit corporation created under this section is a
2-7 public entity performing an essential public function, and property
2-8 owned by a corporation is public property used for an essential
2-9 public and governmental purpose. Therefore, the corporation and
2-10 the corporation's property are exempt from all taxes and special
2-11 assessments of the state or of a municipality, county, or other
2-12 political subdivision of the state.
2-13 (f) The Texas Non-Profit Corporation Act (Article 1396-1.01
2-14 et seq., Vernon's Texas Civil Statutes), and its subsequent
2-15 amendments and Sections 5-20 and 33-36, Development Corporation Act
2-16 of 1976 (Article 5190.6, Vernon's Texas Civil Statutes), and its
2-17 subsequent amendments apply to and govern a corporation created
2-18 under this section.
2-19 Sec. 4B. (a) A river authority that is engaged in the
2-20 distribution and sale of electric energy to the public may enter
2-21 into a hedging contract and related security and insurance
2-22 agreements in relation to crude oil, fuel oil, natural gas, and
2-23 electric energy to protect against loss due to price fluctuations.
2-24 A hedging transaction must comply with the regulations of the
2-25 Commodity Futures Trading Commission and the Securities and
2-26 Exchange Commission.
2-27 (b) A payment made by a river authority under a hedging
3-1 contract or related agreement in relation to fuel supplies or fuel
3-2 reserves constitutes a fuel expense, and the authority may credit
3-3 any amounts the authority receives under the contract or agreement
3-4 against fuel expenses.
3-5 (c) Except as provided by Subsection (d) of this section,
3-6 the board of directors of a river authority may determine and
3-7 designate the amount of money to be invested in a hedging
3-8 transaction.
3-9 (d) The directors of the river authority by formal policy
3-10 shall regulate the investment of funds in crude oil, fuel oil,
3-11 natural gas, and electric energy futures contracts or in options on
3-12 those futures contracts. The policy must provide restrictions and
3-13 procedures for making the investments that a person of ordinary
3-14 prudence, discretion, and intelligence, exercising the judgment and
3-15 care under the circumstances then prevailing, would follow in the
3-16 management of the person's own affairs, not in regard to
3-17 speculation but in regard to the permanent disposition of the
3-18 person's funds, considering the probable income as well as the
3-19 probable safety of the person's capital. The investment may be
3-20 made only for hedging purposes.
3-21 (e) In this section, "hedging" means the buying and selling
3-22 of crude oil, fuel oil, natural gas, and electric energy futures or
3-23 options or similar contracts on those commodity futures as a
3-24 protection against loss due to price fluctuation.
3-25 SECTION 2. The importance of this legislation and the
3-26 crowded condition of the calendars in both houses create an
3-27 emergency and an imperative public necessity that the
4-1 constitutional rule requiring bills to be read on three several
4-2 days in each house be suspended, and this rule is hereby suspended,
4-3 and that this Act take effect and be in force from and after its
4-4 passage, and it is so enacted.