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Amend CSHB 1243 (committee printing version) on page __, line
__ insert the following new appropriately numbered sections and
renumber subsequent sections accordingly:
"SECTION __. Section 161.002, Utilities Code, is amended by
adding Subdivision (2-a) to read as follows:
(2-a) "Board meeting" means a deliberation between a
quorum of the voting board, or between a quorum of the voting board
and another person, during which electric cooperative business or
policy over which the board has responsibility is discussed or
considered, or during which the board takes formal action. The term
does not include the gathering of a quorum of the board at a social
function unrelated to the business of the cooperative, or the
attendance by a quorum of the board at a regional, state, or
national convention or workshop, ceremonial event, or press
conference, if formal action is not taken and any discussion of
cooperative business is incidental to the social function,
convention, workshop, ceremonial event, or press conference.
SECTION __. Subchapter A, Chapter 161, Utilities Code, is
amended by adding Section 161.006 to read as follows:
Sec. 161.006. NONAPPLICABILITY. The following sections of
this chapter do not apply to an electric cooperative that engages
exclusively or primarily in the wholesale sale or transmission of
electricity and does not have a certificated service area for the
retail sale of electricity or to an electric cooperative whose
service territory consists of eighteen counties in Texas and two
counties in New Mexico and has fewer than 5,500 members:
(1) Sections 161.072(d) through (m);
(2) Sections 161.075(a), (d), (e), (f), (g), (h), (i),
(j), and (k);
(3) Section 161.0751;
(4) Section 161.077(d);
(5) Section 161.080;
(6) Section 161.081;
(7) Section 161.082;
(8) Section 161.126; and
(9) Section 161.127.
SECTION __. Subsection (b), Section 161.064, Utilities
Code, is amended to read as follows:
(b) The bylaws may contain any provision for the regulation
and management of the affairs of the electric cooperative that is
consistent with the articles of incorporation and this chapter.
SECTION __. Section 161.072, Utilities Code, is amended by
adding Subsections (c) through (m) to read as follows:
(c) Director elections shall be conducted in a manner that
is fair and open to all members of the electric cooperative.
(d) A board committee of a cooperative with more than
170,000 members may not cast a member's proxy vote in a director
election.
(e) A director who is standing for reelection to the board
of a cooperative with not more than 170,000 members may not serve on
a committee established under the bylaws for the purpose of
casting, or being authorized to cast, the proxy vote of a member in
a director election.
(f) A member's proxy vote may be cast by a committee
established under the bylaws in a director election only if:
(1) a proxy form is sent by regular mail to each member
of record not later than the 30th day before the date of the meeting
at which proxy votes are counted;
(2) the proxy form designates each candidate who is an
incumbent director;
(3) an exact copy of the proxy form is posted on the
cooperative's Internet website, if the cooperative maintains a
website;
(4) the proxy form includes information describing the
process by which proxy votes are authorized and cast, including:
(A) the name of each member of the committee, if
any, established under the bylaws for the purpose of casting proxy
votes in a director election;
(B) the process prescribed in the bylaws for
selecting members to serve on the committee; and
(C) the districts represented by each committee
member, if applicable; and
(5) the proxy form contains the following statements,
in bold type:
(A) "If you grant the committee your proxy, you
are giving the committee full authority to vote your proxy for the
candidates you selected, or, if you did not select any candidates,
to vote your proxy for candidates the committee selects";
(B) "You may rescind your proxy at any time
before votes are cast at the meeting to elect directors"; and
(C) "State law prohibits any person from using
incentives or other enticements to encourage you to provide your
proxy in any board election."
(g) Subsections (d) and (f) may not be construed as limiting
the right of an individual member to collect or cast the proxy votes
of another member in a director election, if allowed by the bylaws.
(h) This section may not be construed as limiting the use of
a proxy as provided by Section 161.069 to establish a quorum to
transact business other than the election of a director.
(i) A person may not use an incentive or other enticement to
encourage a member to authorize another person to cast the member's
proxy vote in a director election.
(j) A cooperative with more than 170,000 members may elect
directors only by district. A member may vote for a director to
represent a district only if the member resides in that district.
(k) A cooperative with more than 170,000 members may
nominate qualified members as candidates in a director election
only through a written petition by members. The bylaws must:
(1) specify the number of printed names and dated
signatures a petition nominating a candidate must contain;
(2) specify a period within which a petition
nominating a candidate must be submitted to the cooperative; and
(3) specify that only members residing in a district
may sign a petition for the nomination of a candidate to represent
that district.
(l) If the bylaws of a cooperative with not more than
170,000 members allow a committee of members to nominate qualified
members as candidates in a director election, the bylaws must also:
(1) allow nominations to be made through one or more
written petitions by members;
(2) specify the number of printed names and dated
signatures a petition nominating a candidate must contain; and
(3) specify a period within which a petition
nominating a candidate must be submitted to the cooperative.
(m) A petition submitted under Subsection (l) must provide
on the petition the name and address of the member seeking
nomination and, if the cooperative nominates or elects directors by
district, the district the member seeks to represent.
SECTION __. Section 161.075, Utilities Code, is amended to
read as follows:
Sec. 161.075. BOARD MEETINGS. (a) The board shall hold a
regular or special board meeting at the place and time specified in
[on] the notice required by Section 161.0751 and [prescribed by]
the bylaws.
(b) The attendance of a director at a board meeting
constitutes a waiver of notice to the director of the meeting unless
the director attends the meeting for the express purpose of
objecting to the transaction of business at the meeting because the
meeting is not lawfully called or convened.
(c) A notice or waiver of notice of a board meeting given to
a director is not required to specify the business to be transacted
at the meeting or the purpose of the meeting.
(d) Except as provided by this section, each member of the
electric cooperative is entitled to attend a regular or special
board meeting. A person who is not a member of the cooperative is
not entitled to attend a regular or special board meeting.
(e) At the board's discretion, the board may convene an
executive session to which the members do not have access to
deliberate and take action on sensitive matters, such as matters
involving confidential personnel information, contracts, lawsuits,
real estate transactions, competitively sensitive information,
information related to the security of the electrical system or the
cooperative, or other privileged, confidential, or proprietary
information.
(f) The board shall reconvene the open session of the
regular or special board meeting to announce the final action taken
on a matter discussed in executive session, except matters
involving confidential personnel information, real estate
transactions, competitively sensitive information, or security
information.
(g) The board secretary or person designated by the
secretary shall make and keep written minutes of each regular or
special board meeting.
(h) The board shall adopt and comply with procedures for
providing a member with access to the entirety of a regular or
special board meeting, other than an executive session.
(i) The board secretary or person designated by the
secretary shall make and keep a written or audio record of each
executive session. The secretary shall preserve the record for at
least two years after the session. The record must include:
(1) a statement of the subject matter of each
deliberation;
(2) a record of any further action taken; and
(3) an announcement by the presiding director at the
beginning and end of the session indicating the date and time.
(j) Subsections (d), (e), (f), (g), (h), and (i) apply to an
electric cooperative with more than 170,000 members.
(k) Each electric cooperative with not more than 170,000
members shall hold an election every five years at the electric
cooperative's annual meeting on the question of whether to make
Subsections (d), (e), (f), (g), (h), and (i) applicable to the
electric cooperative.
SECTION __. Subchapter B, Chapter 161, Utilities Code, is
amended by adding Section 161.0751 to read as follows:
Sec. 161.0751. NOTICE OF BOARD MEETINGS. (a) The board
shall give members notice of the date, hour, place, and planned
agenda of a regular or special board meeting. Notice of a board
meeting must be given at least three days before the scheduled time
of the meeting by:
(1) posting a notice on a bulletin board in a place
convenient to members at the electric cooperative's main office and
at each district office;
(2) posting a notice on the cooperative's Internet
website, if the cooperative maintains a website; and
(3) providing a copy of the notice to a member on a
request by the member.
(b) In the event of an emergency or urgent matter, notice
may be given in the manner prescribed by Subsection (a) at any time
before a regular or special board meeting is convened. An action
taken by the board at a meeting for which notice is given under this
subsection must be ratified by the board at the next meeting for
which notice is given under Subsection (a)
(c) On approval of the Legislative Audit Committee, the
state auditor at the cooperative's expense may audit the financial
transactions and operations of an electric cooperative with more
than 170,000 members if:
(1) a former or current member of the cooperative's
board of directors or senior management is the subject of an ongoing
criminal investigation by the office of the attorney general on May
1, 2009; and
(2) the cooperative has been the subject of a
court-ordered independent investigation:
(A) performed by an independent consulting
entity; and
(B) reviewed by the state auditor.
(d) This subsection and Subsection (c) expire September 1,
2013.
SECTION __. Section 161.077, Utilities Code, is amended by
adding Subsection (d) to read as follows:
(d) The provisions of this chapter that apply to the board
also apply to the executive committee.
SECTION __. Subchapter B, Chapter 161, Utilities Code, is
amended by adding Sections 161.080, 161.081, and 161.082 to read as
follows:
Sec. 161.080. MEMBER'S RIGHT OF ACCESS TO RECORDS. (a) (a)
Except as provided by Subsection (c), a member of an electric
cooperative may, at any reasonable time and on written request that
states a proper purpose for the request, inspect and copy the books
and records of the cooperative relevant to that purpose.
(b) An electric cooperative may charge a member for the cost
of providing information under Subsection (a).
(c) An electric cooperative may limit or deny a member's
request to inspect its books and records if the member:
(1) does not meet the requirements of Subsection (a);
(2) seeks information the release of which would
unduly infringe on or invade the privacy of a person;
(3) seeks information related to a trade secret;
(4) seeks personnel information the disclosure of
which would violate the law or constitute a clearly unwarranted
invasion of personal privacy;
(5) seeks information related to:
(A) pending or reasonably anticipated
litigation;
(B) a real estate transaction for a project that
has not been formally announced or for which contracts have not been
formally awarded;
(C) the cooperative's competitive activity,
including commercial information and utility-related matters that
would, if disclosed, give an advantage to a competitor or
prospective competitor; or
(D) the security of the cooperative's electrical
system; or
(6) seeks information that is confidential,
privileged, or proprietary.
Sec. 161.081. POLICIES AND AUDIT. (a) The board shall
adopt written policies relating to:
(1) travel expenditures for board members, officers,
and employees;
(2) reimbursement of expenses for board members,
officers, and employees;
(3) conflicts of interest for board members, officers,
and employees;
(4) whistleblower protections;
(5) criteria and procedures for the selection,
monitoring, review, and evaluation of outside vendors or contracted
professional services;
(6) budgets for use in planning and controlling costs;
and
(7) the creation of a committee that audits the
actions of the board.
(b) An electric cooperative shall provide for an
independent financial audit, to be performed annually by an
unaffiliated entity that is professionally qualified to perform
such an audit.
Sec. 161.082. COMPLAINTS BY MEMBERS. (a) A member may file
a written complaint with the general manager of the electric
cooperative if the member is aggrieved by an action of the board or
by an employee of the board or of the cooperative that the member
alleges infringes on a right of the member under Sections 161.072,
161.075, 161.0751, 161.080, 161.081, and 161.126.
(b) Not later than the 20th day after the date the general
manager receives a complaint under Subsection (a), the general
manager shall take corrective action regarding the complaint, if
the general manager determines that the action complained of
infringed on the member's rights under Sections 161.072, 161.075,
161.0751, 161.080, 161.081, and 161.126.
(c) If the general manager determines that the action
complained of did not infringe on the member's rights under
Sections 161.072, 161.075, 161.0751, 161.080, 161.081, or 161.126,
or if the general manager otherwise fails to resolve the member's
complaint to the member's satisfaction before the 21st day after
the general manager receives the member's complaint, the member may
file a written complaint with the attorney general's consumer
protection division. A complaint filed with the attorney general
under this subsection must:
(1) identify the electric cooperative by name and
address;
(2) describe in detail the nature of the member's
complaint; and
(3) include copies of documents relevant to the
member's complaint, including:
(A) any relevant written request made by the
member to the cooperative;
(B) the written complaint made by the member to
the general manager under Subsection (a); and
(C) any relevant response from the cooperative
regarding a request or complaint.
(d) In reviewing a member's complaint under this section,
the consumer protection division may request that the cooperative
provide to the division any information relevant to the complaint.
The division must give a cooperative a reasonable opportunity to
inspect and copy the requested information before providing the
information to the division. The division shall designate an
employee of the division to be the person responsible for
receiving, inspecting, or copying information received under this
subsection.
(e) An electric cooperative shall cooperate with a request
for information under Subsection (d) and promptly provide the
requested information to the consumer protection division's
designated employee. The division may not disclose to any person
information provided by a cooperative in response to the request
unless:
(1) the division is required by a court to provide the
information to the person;
(2) the person is an authorized employee of the
division; or
(3) the cooperative that provided the information
consents to the disclosure.
(f) The consumer protection division shall return to a
cooperative any information provided under this section that is
confidential or sensitive to the cooperative.
SECTION __. Subchapter C, Chapter 161, Utilities Code, is
amended by adding Sections 161.126 and 161.127 to read as follows:
Sec. 161.126. PROHIBITION ON ACQUISITION OF GENERATOR
CAPACITY BY CERTAIN ELECTRIC COOPERATIVES. An electric cooperative
with more than 170,000 members that provides retail electric
service may not acquire equipment capable of generating electricity
for sale other than equipment that uses an alternative energy
resource unless the Public Utility Commission of Texas first
approves of the acquisition. The commission by rule shall
establish the standards and procedures by which it will approve an
electric cooperative's acquisition of electric generation
capacity.
Sec. 161.127. NOTIFICATION OF CERTAIN INVESTMENTS. Not
later than the 30th day following the completion of a transaction
that results in an electric cooperative or an affiliate of the
cooperative creating or acquiring an interest in an entity that
does not generate, transmit, or distribute electricity, the
cooperative shall provide a notice to members that contains:
(1) the name of the entity;
(2) a description of the entity;
(3) the reasons for the decision to enter into the
transaction;
(4) a description of the costs associated with the
transaction, and the method of financing for those costs; and
(5) a description of the anticipated effect the
transaction will have on the cooperative's electric energy rates or
prices.
SECTION __. (a) The changes in law made by Section 161.072,
Utilities Code, as amended by this Act, apply only to a director
election held on or after the effective date of this Act. A
director election held before the effective date of this Act is
subject to the law in effect on the date the election is held, and
that law is continued in effect for that purpose.
(b) The changes in law made by Section 161.075, Utilities
Code, as amended by this Act, and by Section 161.0751, Utilities
Code, as added by this Act, apply only to a meeting convened on or
after the effective date of this Act. A meeting convened before the
effective date of this Act is subject to the law in effect on the
date the meeting is held, and that law is continued in effect for
that purpose.
(c) The changes in law made by Sections 161.080 and 161.082,
Utilities Code, as added by this Act, apply only to a request to
inspect records submitted on or after the effective date of this
Act. A request submitted before the effective date of this Act is
subject to the law in effect on the date of the request, and that law
is continued in effect for that purpose.
(d) The changes in law made by Section 161.127, Utilities
Code, as added by this Act, apply only to a transaction that is
completed on or after the effective date of this Act. A transaction
that is completed before the effective date of this Act is subject
to the law in effect on the date the transaction is completed, and
that law is continued in effect for that purpose.
SECTION __. Not later than December 31, 2010, each electric
cooperative with not more than 170,000 members shall hold an
election as required by Section 161.075(k), as added by this Act."