1-1 By: Uher (Senate Sponsor - Armbrister) H.B. No. 1432
1-2 (In the Senate - Received from the House May 13, 1993;
1-3 May 14, 1993, read first time and referred to Committee on Natural
1-4 Resources; May 21, 1993, reported favorably, as amended, by the
1-5 following vote: Yeas 9, Nays 0; May 21, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Sims x
1-9 Truan x
1-10 Armbrister x
1-11 Barrientos x
1-12 Bivins x
1-13 Brown x
1-14 Carriker x
1-15 Lucio x
1-16 Montford x
1-17 Ratliff x
1-18 Shelley x
1-19 COMMITTEE AMENDMENT NO. 1 By: Truan
1-20 Amend H.B No. 1432 by adding a new Subsection (f) to Section 4B, to
1-21 read as follows:
1-22 (f) This section does not in any way limit the authority of
1-23 the Public Utility Commission to determine the recoverability of
1-24 cost from rate payers.
1-25 A BILL TO BE ENTITLED
1-26 AN ACT
1-27 relating to the powers of a river authority that engages in the
1-28 distribution and sale of electric energy; granting the authority to
1-29 issue bonds.
1-30 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-31 SECTION 1. Chapter 245, Acts of the 67th Legislature,
1-32 Regular Session, 1981 (Article 717p, Vernon's Texas Civil
1-33 Statutes), is amended by adding Sections 4A and 4B to read as
1-34 follows:
1-35 Sec. 4A. (a) The board of directors of a river authority
1-36 that is engaged in the distribution and sale of electric energy to
1-37 the public may create by order one or more nonprofit corporations
1-38 to act on behalf of the authority as its duly constituted authority
1-39 and instrumentality to exercise any power of the authority under
1-40 law except a power relating to solid waste management activities or
1-41 activities as an "exempt wholesale generator" as defined by the
1-42 Public Utility Holding Company Act of 1935 (15 U.S.C. Section
1-43 79z-5a(a)), but including the authority to acquire, develop,
1-44 operate, and sell fuel, fuel reserves, and mineral interests.
1-45 (b) When exercising a power under this Act, a corporation
1-46 created under this Act and the board of directors of the
1-47 corporation have the same powers as the creating river authority
1-48 and the authority's board.
1-49 (c) The board of directors of the authority shall appoint
1-50 the directors of a nonprofit corporation created under this
1-51 section. A member of the authority's board of directors may serve
1-52 as a member of the nonprofit corporation's board. The
1-53 corporation's directors serve at the will of the authority's
1-54 directors.
1-55 (d) The budget of a nonprofit corporation created under this
1-56 section must be approved by the board of directors of the
1-57 authority. The activities of the corporation are subject to the
1-58 continuing review and supervision of the authority's board of
1-59 directors.
1-60 (e) The Texas Non-Profit Corporation Act (Article 1396-1.01
1-61 et seq., Vernon's Texas Civil Statutes) and its subsequent
1-62 amendments apply to and govern a corporation created under this
1-63 section. Sections 5-20 and 33-36, Development Corporation Act of
1-64 1979 (Article 5190.6, Vernon's Texas Civil Statutes), and their
1-65 subsequent amendments apply to and govern a corporation created
1-66 under this section, except that a reference in those sections to an
1-67 Act includes this Act, as appropriate, and a reference to a unit
1-68 includes a river authority to which this Act applies.
2-1 (f) The property of a nonprofit corporation created under
2-2 this section is not exempt from taxes and special assessments of
2-3 the state or of a municipality, county, or other political
2-4 subdivision of the state.
2-5 (g) The board of directors of the nonprofit corporation may
2-6 issue bonds or other obligations or otherwise borrow money on
2-7 behalf of the river authority to carry out any of its corporate
2-8 purposes. The issuance of any bonds or obligations must be
2-9 approved by the board of directors of the river authority. Bonds
2-10 and other obligations issued or entered into by the nonprofit
2-11 corporation and the proceedings authorizing the issuance or the
2-12 entering into of an obligation shall be submitted to the attorney
2-13 general for examination. If the attorney general finds that the
2-14 bonds or other obligations have been authorized in accordance with
2-15 the Texas Constitution and this Act, the attorney general shall
2-16 approve them, and they shall be registered by the comptroller.
2-17 After approval and registration the bonds and obligations are
2-18 incontestable in any court or other forum for any reason and are
2-19 valid and binding obligations in accordance with their terms for
2-20 all purposes.
2-21 (h) In addition to other authority granted by this Act, the
2-22 board of directors of the nonprofit corporation may exercise the
2-23 powers granted to the governing body of an issuer and a public
2-24 agency with regard to the issuance of obligations under Chapter
2-25 656, Acts of the 68th Legislature, Regular Session, 1983 (Article
2-26 717q, Vernon's Texas Civil Statutes), Chapter 3, Acts of the 61st
2-27 Legislature, Regular Session, 1969 (Article 717k-2, Vernon's Texas
2-28 Civil Statutes), and Chapter 845, Acts of the 67th Legislature,
2-29 Regular Session, 1981 (Article 717k-6, Vernon's Texas Civil
2-30 Statutes), and their subsequent amendments.
2-31 Sec. 4B. (a) A river authority that is engaged in the
2-32 distribution and sale of electric energy to the public or a
2-33 corporation created under Section 4A of this Act may enter into a
2-34 hedging contract and related security and insurance agreements in
2-35 relation to crude oil, fuel oil, natural gas, and electric energy
2-36 to protect against loss due to price fluctuations. A hedging
2-37 transaction must comply with the regulations of the Commodity
2-38 Futures Trading Commission and the Securities and Exchange
2-39 Commission.
2-40 (b) A payment made by a river authority or a nonprofit
2-41 corporation under a hedging contract or related agreement in
2-42 relation to fuel supplies or fuel reserves constitutes a fuel
2-43 expense, and the authority or nonprofit corporation may credit any
2-44 amounts it receives under the contract or agreement against fuel
2-45 expenses.
2-46 (c) Except as provided by Subsection (d) of this section,
2-47 the board of directors of a river authority may determine and
2-48 designate the amount of money to be invested in a hedging
2-49 transaction.
2-50 (d) The directors of the river authority by formal policy
2-51 shall regulate the investment of funds in crude oil, fuel oil,
2-52 natural gas, and electric energy futures contracts or in options on
2-53 those futures contracts. The policy must provide restrictions and
2-54 procedures for making the investments that a person of ordinary
2-55 prudence, discretion, and intelligence, exercising the judgment and
2-56 care under the circumstances then prevailing, would follow in the
2-57 management of the person's own affairs, not in regard to
2-58 speculation but in regard to the permanent disposition of the
2-59 person's funds, considering the probable income as well as the
2-60 probable safety of the person's capital. The investment may be
2-61 made only for hedging purposes.
2-62 (e) In this section, "hedging" means the buying and selling
2-63 of crude oil, fuel oil, natural gas, and electric energy futures or
2-64 options or similar contracts on those commodity futures as a
2-65 protection against loss due to price fluctuation.
2-66 SECTION 2. The importance of this legislation and the
2-67 crowded condition of the calendars in both houses create an
2-68 emergency and an imperative public necessity that the
2-69 constitutional rule requiring bills to be read on three several
2-70 days in each house be suspended, and this rule is hereby suspended,
3-1 and that this Act take effect and be in force from and after its
3-2 passage, and it is so enacted.
3-3 * * * * *
3-4 Austin,
3-5 Texas
3-6 May 21, 1993
3-7 Hon. Bob Bullock
3-8 President of the Senate
3-9 Sir:
3-10 We, your Committee on Natural Resources to which was referred H.B.
3-11 No. 1432, have had the same under consideration, and I am
3-12 instructed to report it back to the Senate with the recommendation
3-13 that it do pass, as amended, and be printed.
3-14 Sims,
3-15 Chairman
3-16 * * * * *
3-17 WITNESSES
3-18 FOR AGAINST ON
3-19 ___________________________________________________________________
3-20 Name: John Rubottom x
3-21 Representing: L.C.R.A.
3-22 City: Austin
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3-24 Name: William Freeman x
3-25 Representing: L.C.R.A.
3-26 City: Austin
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