By: Swinford H.B. No. 3820

A BILL TO BE ENTITLED

AN ACT

relating to the governance and disclosure requirements of electric cooperative corporations and the review of complaints of electric cooperative corporation members by the Office of the Attorney General.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 161.072, Utilities Code, is amended by adding Subsections (c) through (h) to read as follows:

(c) Notwithstanding Section 161.070, if the bylaws provide for voting by proxy:

(1) a director who is standing for reelection to the board 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; and

(2) a member's proxy vote may be cast by a committee described by Subdivision (1) in a director election only if:

(A) 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;

(B) the proxy form lists:

(i) the names of all qualified candidates and, if the cooperative nominates or elects directors by district, the district the member seeks to represent, or

(ii) the slate of candidates nominated at the district meeting, if applicable;

(C) the proxy form designates each candidate who is an incumbent director;

(D) an exact copy of the proxy form is posted on the cooperative's Internet website, if the cooperative maintains a website;

(E) the proxy form includes information describing the process by which proxy votes are authorized and cast, including:

(i) the name of each member of the committee established under the bylaws for the purpose of casting proxy votes in a director election;

(ii) the process prescribed in the bylaws for selecting members to serve on the committee; and

(iii) the districts represented by each committee member, if applicable; and

(F) the proxy form contains the following statements, in bold type:

(i) "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";

(ii) "You may rescind your proxy at any time before votes are cast at the meeting to elect directors"; and

(iii) "State law prohibits any person from using incentives or other enticements to encourage you to provide your proxy in any board election."

(d) Subsection (c) may not be construed as limiting the right of an individual member to collect or cast the proxy vote of another member in a director election, if allowed by the bylaws.

(e) 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.

(f) 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.

(g) If the bylaws of a cooperative 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;

(3) specify the time period within which the names and dated signatures may be collected; and

(4) specify the deadline by which a petition nominating a candidate must be submitted to the cooperative.

(h) A petition submitted under Subsection (g) 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 2. Section 161.075, Utilities Code, is amended by amending Subsection (a) and adding Subsections (d) through (g) to read as follows:

(a) The board shall hold a regular or special board meeting at the place and time specified in [on] the notice prescribed by Subsection (d) and the bylaws.

(d) 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 posting the notice in a prominent place convenient to members at the cooperative's main office and each district office, and on the cooperative's Internet website, if the cooperative maintains a website. The board shall provide on request a copy of the notice to a member of the cooperative.

(e) In the event of an emergency or urgent matter, notice may be given in the manner prescribed by Subsection (d) less than three days before a regular or special board meeting is convened.

(f) An action taken by the board at a meeting for which notice was provided less than three days before a regular or special board meeting is convened must be ratified by the board at the next board meeting.

(g) A member of the electric cooperative is entitled to attend a regular or special board meeting for the duration of the period specified in the meeting notice for member comments and to have a reasonable opportunity to comment on any matter on the meeting agenda or related to cooperative business. Only a member of the electric cooperative is entitled to attend a regular or special board meeting for the duration of the period specified in the meeting notice for member comments.

SECTION 3. Subchapter B, Chapter 161, Utilities Code, is amended by adding Sections 161.080 and 161.081 to read as follows:

Sec. 161.080. ANNUAL FINANCIAL AUDIT. (a) The board annually, at the electric cooperative's expense, shall have an independent financial audit made of the cooperative's books and records.

(b) The audit must be performed by a qualified, independent, professional entity.

(c) The board shall make the results of the audit available to any member of the cooperative upon request.

Sec. 161.081. MEMBER'S RIGHT OF ACCESS TO INFORMATION. (a) A member of an electric cooperative may, at any reasonable time and on written request that states a proper purpose, inspect and copy the books and records of the cooperative relevant to that purpose.

(b) The cooperative may charge the member for the cost of providing the information.

(c) An electric cooperative may not limit or deny a member's request to inspect its books and records unless 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) real estate transactions for projects that have 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 advantage to competitors or prospective competitors; or

(D) the security of the electrical system; or

(6) seeks information that is confidential, privileged, or proprietary.

SECTION 4. Subchapter C, Chapter 161, Utilities Code, is amended by adding Section 161.126 to read as follows:

Sec. 161.126. NOTIFICATION OF INVESTMENT IN CERTAIN BUSINESS ENTITIES. If an electric cooperative or an affiliate of the cooperative enters into a transaction in which the cooperative creates or acquires an interest in a business entity that does not generate, transmit, or distribute electricity, the cooperative shall, not later than the 30th day following the completion of the transaction, 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 cost and method of financing the transaction; and

(5) a description of the anticipated effect the transaction will have on the cooperative's electricity rates.

SECTION 5. Chapter 161, Utilities Code, is amended by adding Subchapter G to read as follows:

SUBCHAPTER G. ATTORNEY GENERAL REVIEW

Sec. 161.301. MEMBER COMPLAINTS. (a) A member may file a written complaint with an electric cooperative that the cooperative or an officer or agent of the cooperative failed or refused to follow Section 161.072, 161.075, 161.080, 161.081, or 161.126.

(b) If the electric cooperative does not resolve the complaint to the member's satisfaction before the 21st day after the date the complaint is received by the cooperative, the member may file a written complaint with the consumer protection division of the office of the attorney general. The complaint must identify the name and address of the electric cooperative, describe the problem in detail, and provide copies of documents relevant to the complaint, including any request the member provided to the cooperative, the written complaint the member filed with the cooperative, and any response from the cooperative.

(c) The consumer protection division of the office of the attorney general may review a complaint filed by a member under this subchapter for purposes of determining if the electric cooperative or an officer or agent of the cooperative failed or refused to follow Section 161.072, 161.075, 161.080, 161.081, or 161.126.

(d) The consumer protection division may request from the cooperative additional information about the complaint. The division must identify in the request the persons authorized by the division to receive, inspect, or copy the information.

(e) The electric cooperative shall cooperate fully with the consumer protection division and shall provide to the authorized employee of the division information to assist in resolving the complaint within the time specified by the division.

Sec. 161.302. USE OF INFORMATION ACQUIRED BY ATTORNEY GENERAL. (a) No information provided in response to a request under Section 161.301, unless otherwise ordered by a court for good cause shown, may be produced for inspection or copying by, nor may its contents be disclosed to, any person other than an authorized employee of the consumer protection division without the consent of the electric cooperative that provided the information.

(b) The consumer protection division may use the information or copies of the information as necessary to resolve a complaint filed under this subchapter, including presentation before any court in a suit filed under Section 161.303. Confidential or sensitive information shall not be presented except with approval of the court in which the action is pending after adequate notice to the electric cooperative. If no suit is filed under Section 161.303, any confidential or sensitive information shall be returned to the electric cooperative upon request after the complaint is closed.

Sec. 161.303. INJUNCTIVE RELIEF. (a) If the consumer protection division determines that it is in the public interest, the attorney general may file suit against an electric cooperative to prevent or restrain by temporary restraining order, temporary injunction, or permanent injunction a violation of Section 161.072, 161.075, 161.080, 161.081, or 161.126.

(b) A suit filed under this section must be filed not later than one year after the date the member of the electric cooperative filed the complaint with the consumer protection division, and may be brought in a district court in Travis County or in a county in which any part of the violation occurs.

(c) If the attorney general files suit against an electric cooperative under this section and a temporary or permanent injunction is granted against the cooperative or an officer or agent of the cooperative, the attorney general may recover reasonable expenses, court costs, investigative costs, and attorney's fees.

SECTION 6. (a) The change in law made to Section 161.072, Utilities Code, as amended by this Act, applies 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 change in law made by Section 161.075, Utilities Code, as amended by this Act, applies 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 change in law made by Section 161.081, Utilities Code, as added by this Act, applies 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 change in law made by Section 161.126, Utilities Code, as added by this Act, applies 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 that date, and that law is continued in effect for that purpose.

(e) The change in law made by Subchapter G, Chapter 161, Utilities Code, as added by this Act, applies only to a complaint filed by a member of an electric cooperative regarding an action that occurs on or after the effective date of this Act. An action that is completed before the effective date of this Act is subject to the law in effect on that date, and that law is continued in effect for that purpose.

SECTION 7. This Act takes effect September 1, 2009.