Bill Text: TX HB1926 | 2015-2016 | 84th Legislature | Comm Sub
Bill Title: Relating to the operations of a municipally owned utility or municipal power agency; affecting a provision that is subject to criminal penalties; providing authority to issue bonds.
Spectrum: Partisan Bill (Republican 8-0)
Status: (Engrossed - Dead) 2015-05-30 - Senate Amendments Analysis distributed [HB1926 Detail]
Download: Texas-2015-HB1926-Comm_Sub.html
By: Kacal, et al. (Senate Sponsor - Fraser) | H.B. No. 1926 | |
(In the Senate - Received from the House April 20, 2015; | ||
April 23, 2015, read first time and referred to Committee on | ||
Natural Resources and Economic Development; May 4, 2015, reported | ||
adversely, with favorable Committee Substitute by the following | ||
vote: Yeas 9, Nays 0; May 4, 2015, sent to printer.) | ||
COMMITTEE SUBSTITUTE FOR H.B. No. 1926 | By: Fraser |
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relating to the operations of a municipally owned utility or | ||
municipal power agency; affecting a provision that is subject to | ||
criminal penalties; providing authority to issue bonds. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 37.051, Utilities Code, is amended by | ||
adding Subsections (g) and (h) to read as follows: | ||
(g) A municipally owned utility or a municipal power agency | ||
created under Chapter 163 may not directly or indirectly construct, | ||
install, or extend a transmission facility outside of the municipal | ||
boundaries of the municipality that owns the municipally owned | ||
utility, or the power agency's boundaries, which for the purposes | ||
of this subsection consist of the municipal boundaries of the | ||
participating public entities, unless the municipally owned | ||
utility or power agency first obtains from the commission, through | ||
the application process provided by Section 37.053, a certificate | ||
that states that the public convenience and necessity requires or | ||
will require the transmission facility. Section 37.056 applies to | ||
an application under this subsection. This subsection does not | ||
apply to a transmission facility placed in service after September | ||
1, 2015, that is developed to interconnect a new natural gas | ||
generation facility to the ERCOT transmission grid and for which, | ||
on or before January 1, 2015, a municipally owned utility was | ||
contractually obligated to purchase at least 190 megawatts of | ||
capacity. | ||
(h) The commission shall adopt rules as necessary to provide | ||
exemptions to the application of Subsection (g) that are similar to | ||
the exemptions to the application of this section to an electric | ||
utility, including exemptions for: | ||
(1) upgrades to an existing transmission line that do | ||
not require any additional land, right-of-way, easement, or other | ||
property not owned by the municipally owned utility; and | ||
(2) the construction, installation, or extension of a | ||
transmission facility that is entirely located not more than 10 | ||
miles outside of a municipally owned utility's certificated service | ||
area that occurs before September 1, 2021. | ||
SECTION 2. Subchapter A, Chapter 35, Utilities Code, is | ||
amended by adding Section 35.009 to read as follows: | ||
Sec. 35.009. AMOUNTS PAID IN LIEU OF AD VALOREM TAXES FOR | ||
CERTAIN FACILITIES. A municipally owned utility that is required | ||
to apply for a certificate of public convenience and necessity to | ||
construct, install, or extend a transmission facility within ERCOT | ||
under Chapter 37 is entitled to recover, through the utility's | ||
wholesale transmission rate, reasonable payments made to a taxing | ||
entity in lieu of ad valorem taxes on that transmission facility, | ||
provided that: | ||
(1) the utility enters into a written agreement with | ||
the governing body of the taxing entity related to the payments; | ||
(2) the amount paid is the same as the amount the | ||
utility would have to pay to the taxing entity on that transmission | ||
facility if the facility were subject to ad valorem taxation; | ||
(3) the governing body of the taxing entity is not the | ||
governing body of the utility; and | ||
(4) the utility provides the commission with a copy of | ||
the written agreement and any other information the commission | ||
considers necessary in relation to the agreement. | ||
SECTION 3. Chapter 163, Utilities Code, is amended by | ||
adding Subchapter C-1 to read as follows: | ||
SUBCHAPTER C-1. ALTERNATE GOVERNANCE FOR CERTAIN MUNICIPAL POWER | ||
AGENCIES | ||
Sec. 163.071. DEFINITIONS. In this subchapter: | ||
(1) "Agency" means a municipal power agency for which | ||
concurrent ordinances are adopted under Section 163.073. | ||
(2) "Bond" includes a note, but does not include a | ||
nonnegotiable purchase money note issued under Section 163.067 or | ||
163.087. | ||
(3) "Concurrent ordinance" means an ordinance or order | ||
adopted under this subchapter by all of the participating public | ||
entities of an agency. | ||
(4) "Obligations" means revenue bonds or notes. | ||
Sec. 163.072. CONSTRUCTION. This subchapter shall be | ||
liberally construed to carry out its purpose. | ||
Sec. 163.073. APPLICABILITY; ALTERNATE GOVERNANCE. | ||
(a) This subchapter applies to a municipal power agency created by | ||
two or more public entities under Subchapter C or a predecessor | ||
statute, including an agency re-created under Section 163.055 or a | ||
predecessor statute. | ||
(b) The participating public entities of a municipal power | ||
agency may by concurrent ordinance elect to apply this subchapter | ||
to the agency as an alternative to Subchapter C. | ||
(c) Concurrent ordinances described by this section must, | ||
as adopted by each public entity: | ||
(1) contain identical provisions; and | ||
(2) state that the public entity has elected that the | ||
agency shall, on and after the date designated in the ordinance, be | ||
governed by the provisions of this subchapter. | ||
Sec. 163.074. CONFLICTS WITH OTHER LAW. This subchapter | ||
prevails to the extent of a conflict between this subchapter and any | ||
other law, including: | ||
(1) a law regulating the affairs of a municipal | ||
corporation; or | ||
(2) a home-rule charter provision. | ||
Sec. 163.075. NATURE OF AGENCY. (a) An agency is a: | ||
(1) separate municipal corporation; | ||
(2) political subdivision of this state; and | ||
(3) political entity and corporate body. | ||
(b) An agency may not impose a tax but has all the other | ||
powers relating to municipally owned utilities and provided by law | ||
to a municipality that owns a public utility. | ||
Sec. 163.076. ADDITION OR REMOVAL OF PUBLIC ENTITIES. | ||
(a) The public entities that created or re-created an agency may | ||
by concurrent ordinances: | ||
(1) add a new public entity as a participating public | ||
entity in the agency; or | ||
(2) remove a public entity from participation in the | ||
agency. | ||
(b) Concurrent ordinances described by this section must, | ||
as adopted by each public entity: | ||
(1) contain identical provisions; | ||
(2) define the boundaries of the agency to include the | ||
territory within the boundaries of each participating public | ||
entity; | ||
(3) designate the name of the agency; and | ||
(4) designate the number, place, terms, and manner of | ||
appointment of directors, as provided by Section 163.078. | ||
(c) The public entities may not add or remove a public | ||
entity if the addition or removal will impair an agency obligation. | ||
Sec. 163.077. ELECTION FOR ADDITION OF PUBLIC ENTITY. | ||
(a) Public entities may not adopt concurrent ordinances under | ||
Section 163.076 adding a participating public entity unless the | ||
addition has been approved by a majority of the qualified voters of | ||
the additional public entity at an election called and held for that | ||
purpose. | ||
(b) Notice of an election under this section shall be given | ||
in accordance with Section 1251.003, Government Code. The election | ||
shall be called and held in accordance with: | ||
(1) the Election Code; | ||
(2) Chapter 1251, Government Code; and | ||
(3) this subchapter. | ||
Sec. 163.078. BOARD OF DIRECTORS. (a) The agency shall be | ||
governed by a board of directors. | ||
(b) The board is responsible for the management, operation, | ||
and control of the property belonging to the agency. | ||
(c) The board may by resolution delegate management or | ||
operational authority to an officer, employee, or committee of the | ||
agency, except that the delegation may not include legislative | ||
functions, including the sale or purchase of agency properties, the | ||
exercise of the power of eminent domain, the adoption or amendment | ||
of budgets and rates, or the issuance of debt. The board may repeal | ||
a resolution delegating management or operational authority: | ||
(1) if the board is composed of six or more directors, | ||
by the affirmative vote of six directors, including the affirmative | ||
vote of at least one director appointed by each participating | ||
public entity; or | ||
(2) if the board is composed of fewer than six | ||
directors, by the affirmative vote of at least one director | ||
appointed by each participating public entity. | ||
(d) The board must include at least four directors. Each | ||
director must be appointed by place by the governing bodies of the | ||
participating public entities. Each participating public entity is | ||
entitled to appoint at least one director. | ||
(e) Directors must serve staggered terms. Successor | ||
directors are appointed in the same manner as the original | ||
appointees. | ||
(f) To qualify to serve as a director, when the person takes | ||
the constitutional oath of office, the person must be: | ||
(1) a qualified voter and reside in the boundaries of | ||
the appointing public entity; | ||
(2) an employee, officer, or member of the governing | ||
body of the appointing public entity; or | ||
(3) a retail electric customer of the appointing | ||
public entity. | ||
(g) Except as provided by Subsections (h) and (i), an | ||
employee, officer, or member of the governing body of a | ||
participating public entity serving as a director may not have a | ||
personal interest in a contract executed by the agency other than as | ||
an employee, officer, or member of the governing body of the public | ||
entity. | ||
(h) An employee, officer, or member of the governing body of | ||
a participating public entity serving as a director is considered | ||
to be a local public official for the purposes of Chapter 171, Local | ||
Government Code. | ||
(i) An agency and a participating public entity are | ||
considered to be political subdivisions for the purposes of Section | ||
131.903, Local Government Code. | ||
(j) Directors serve without compensation. A director who is | ||
an employee, officer, or member of the governing body of a | ||
participating public entity may continue to receive from the public | ||
entity the compensation associated with the office or employment. | ||
(k) A director serves at the discretion of the appointing | ||
public entity. The governing body of a public entity that appoints | ||
a director may remove the director from office at any time with or | ||
without cause. The governing body shall promptly appoint a new | ||
director to serve the remainder of the unexpired term of the removed | ||
director. | ||
Sec. 163.079. SEPARATE BOARDS OF DIRECTORS. (a) The | ||
public entities that created or re-created an agency may amend the | ||
creating concurrent ordinances to provide for the agency to be | ||
governed by one board of directors for the agency's generation | ||
system and another board of directors for the agency's transmission | ||
system. | ||
(b) The concurrent ordinances as amended must contain | ||
identical provisions. | ||
(c) Section 163.078 applies to the separate boards and to | ||
the directors of the separate boards, except that: | ||
(1) there is no minimum number of directors for a board | ||
established under this section; | ||
(2) each participating public entity is not entitled | ||
to appoint a director to each board of an agency; and | ||
(3) the repeal of a resolution under Section | ||
163.078(c) does not require approval by at least one director | ||
appointed by each participating public entity. | ||
(d) Separate boards established under this section are not | ||
required to have the same number of directors. | ||
Sec. 163.080. POWERS. (a) An agency may not engage in any | ||
utility business other than: | ||
(1) the generation and sale or exchange of electric | ||
energy to: | ||
(A) a participating public entity; or | ||
(B) a private entity that owns jointly with the | ||
agency an electric generating facility in this state; or | ||
(2) the provision of wholesale transmission service | ||
under Chapter 35. | ||
(b) The agency may: | ||
(1) perform any act necessary to the full exercise of | ||
the agency's powers; | ||
(2) enter into a contract, lease, or agreement with or | ||
accept a grant or loan from a: | ||
(A) department or agency of the United States; | ||
(B) department, agency, or political subdivision | ||
of this state; or | ||
(C) public or private person; | ||
(3) use the uniform system of accounts prescribed for | ||
utilities and licenses by the Federal Energy Regulatory Commission; | ||
and | ||
(4) adopt rules to govern the operation of the agency | ||
and its employees, facilities, and service. | ||
(c) The agency may sell, lease, convey, or otherwise dispose | ||
of any right, interest, or property of the agency, including its | ||
electric facilities. A sale, lease, conveyance, or other | ||
disposition having a value of more than $10 million shall require | ||
prior approval of each participating public entity, unless the | ||
public entities have agreed otherwise by written contract or the | ||
property was purchased by the agency for mining purposes. | ||
Sec. 163.081. CONSTRUCTION CONTRACTS. (a) Except as | ||
provided by Subsection (c), an agency may award a contract for | ||
construction of an improvement that involves the expenditure of | ||
more than $20,000 only on the basis of competitive bids. | ||
(b) The agency shall publish notice of intent to receive | ||
bids once a week for two consecutive weeks in a newspaper of general | ||
circulation in this state. The first publication must appear | ||
before the 14th day before the date bids are to be received. | ||
(c) An entity that has joint ownership of the improvement to | ||
be constructed or that is an agent of a joint owner shall award a | ||
contract using the entity's contracting procedures. | ||
Sec. 163.082. SALE OR EXCHANGE OF ELECTRIC ENERGY. (a) An | ||
agency may participate through appropriate contracts in power | ||
pooling and power exchange agreements with other entities through | ||
direct or indirect system interconnections. | ||
(b) An entity that participates with an agency under this | ||
section may: | ||
(1) purchase electric energy from the agency; | ||
(2) sell or dispose of electric energy to the agency; | ||
or | ||
(3) exchange electric energy with the agency. | ||
(c) An entity payment for electric energy purchased from the | ||
agency is an operating expense of the entity's electric system. | ||
(d) An agency contract to sell or exchange electric energy | ||
may require the purchaser to pay for the electric energy regardless | ||
of whether the electric energy is produced or delivered. | ||
Sec. 163.083. RATES AND CHARGES. (a) An agency may | ||
establish and maintain rates and charges for electric power and | ||
energy the agency delivers, transmits, or exchanges. The rates and | ||
charges must: | ||
(1) be reasonable and in accordance with prudent | ||
utility practices; | ||
(2) be based on periodic cost of service studies and | ||
subject to modification, unless such a basis for rates and charges | ||
is waived by the purchaser by contract; and | ||
(3) be developed to recover the agency's cost of | ||
producing and transmitting the electric power and energy, as | ||
applicable, which cost must include the amortization of capital | ||
investment. | ||
(b) Notwithstanding Subsection (a), this state reserves its | ||
power to regulate an agency's rates and charges for electric energy | ||
supplied by the agency's facilities. | ||
(c) Until obligations issued under this chapter have been | ||
paid and discharged, with all interest on the obligations, interest | ||
on unpaid interest installments on the obligations, and other | ||
connected and incurred costs or expenses, this state pledges to and | ||
agrees with the purchasers and successive holders of the | ||
obligations that it will not: | ||
(1) limit or alter the power of an agency to establish | ||
and collect rates and charges under this section sufficient to pay: | ||
(A) necessary operational and maintenance | ||
expenses; | ||
(B) interest and principal on obligations issued | ||
by the agency; | ||
(C) sinking funds and reserve fund payments; and | ||
(D) other charges necessary to fulfill the terms | ||
of any agreement; or | ||
(2) take any action that will impair the rights or | ||
remedies of the holders of the obligations. | ||
Sec. 163.084. REVENUE BONDS. (a) The agency may issue | ||
revenue bonds to accomplish the purposes of the agency. | ||
(b) The agency may pledge to the payment of the obligations | ||
the revenues of all or part of its electric facilities, including | ||
facilities acquired after the obligations are issued. However, | ||
operating and maintenance expenses, including salaries and labor, | ||
materials, and repairs of electric facilities necessary to render | ||
efficient service, constitute a first lien on and charge against | ||
the pledged revenue. | ||
(c) The agency may set aside from the proceeds from the sale | ||
of the obligations amounts for payment into the interest and | ||
sinking fund and reserve fund, and for interest and operating | ||
expenses during construction and development, as specified in the | ||
proceedings authorizing the obligations. | ||
(d) Obligation proceeds may be invested, pending their use, | ||
in securities, interest-bearing certificates, or time deposits as | ||
specified in the authorizing proceedings. | ||
(e) Agency obligations are authorized investments for: | ||
(1) a bank; | ||
(2) a savings bank; | ||
(3) a trust company; | ||
(4) a savings and loan association; and | ||
(5) an insurance company. | ||
(f) The obligations, when accompanied by all appurtenant, | ||
unmatured coupons and to the extent of the lesser of their face | ||
value or market value, are eligible to secure the deposit of public | ||
funds of this state, a political subdivision of this state, and any | ||
other political corporation of this state. | ||
Sec. 163.085. REFUNDING BONDS. The agency may issue | ||
refunding bonds. | ||
Sec. 163.086. ISSUANCE, FORM, AND PROVISIONS OF BONDS. | ||
(a) Agency bonds that are payable from agency revenues or | ||
anticipated bond proceeds and the records relating to their | ||
issuance must be submitted to the attorney general for examination | ||
before delivery. | ||
(b) The bonds: | ||
(1) must mature serially or otherwise not more than 50 | ||
years after the date of issuance; | ||
(2) may be made redeemable before maturity at the time | ||
and at the price or prices set by the agency; and | ||
(3) may be sold at public or private sale under the | ||
terms and for the price the agency determines to be in the best | ||
interest of the agency. | ||
(c) The bonds must be signed by the presiding officer or | ||
assistant presiding officer of the agency, be attested by the | ||
secretary, and bear the seal of the agency. The signatures may be | ||
printed on the bonds if authorized by the agency, and the seal may | ||
be impressed or printed on the bonds. The agency may adopt or use | ||
for any purpose the signature of an individual who has been an | ||
officer of the agency, regardless of whether the individual has | ||
ceased to be an officer at the time the bonds are delivered to the | ||
purchaser. | ||
Sec. 163.087. NONNEGOTIABLE PURCHASE MONEY NOTES. (a) The | ||
agency may issue nonnegotiable purchase money notes to acquire land | ||
or fuel resources. | ||
(b) Nonnegotiable purchase money notes are: | ||
(1) payable in installments; | ||
(2) secured by the property acquired with the notes or | ||
other collateral the agency substitutes; and | ||
(3) not a security or agency obligation. | ||
(c) Nonnegotiable purchase money notes may be further | ||
secured by a promise to issue bonds or bond anticipation notes to | ||
pay the purchase money notes. | ||
Sec. 163.088. BOND ANTICIPATION NOTES. (a) The agency may | ||
issue bond anticipation notes: | ||
(1) for any purpose for which the agency may issue | ||
bonds; or | ||
(2) to refund previously issued bond anticipation | ||
notes or nonnegotiable purchase money notes. | ||
(b) Bond anticipation notes are subject to the limitations | ||
and conditions prescribed by this subchapter for bonds. | ||
(c) The agency may contract with purchasers of bond | ||
anticipation notes that the proceeds of one or more series of bonds | ||
will be used to pay or refund the notes. | ||
Sec. 163.089. PUBLIC SECURITIES. (a) It is a public | ||
purpose for a public entity that has participated in the creation of | ||
an agency to pay costs of planning, acquisition, construction, | ||
ownership, operation, and maintenance of electric facilities. | ||
(b) A public entity may issue public securities, as defined | ||
by Section 1201.002(2), Government Code, including bonds, notes, or | ||
other forms of indebtedness, in the principal amount approved by | ||
the governing body of the public entity, for the purpose of | ||
financing electric facilities or improvements to electric | ||
facilities to be owned or operated by the agency or otherwise in | ||
furtherance of a purpose described by this section. | ||
(c) A public entity and an agency may agree in a contract, or | ||
by other official action of the public entity and agency, to terms | ||
and conditions governing the use by the agency of the proceeds of | ||
the public securities issued by a public entity for a purpose | ||
described by this section. | ||
(d) A contract or other official action described by | ||
Subsection (c) may include provisions with respect to, and | ||
conclusively establish sufficient consideration for, the use of the | ||
proceeds. The consideration may include the right to: | ||
(1) use the financed facilities or portions of the | ||
facilities; | ||
(2) receive output from the financed facilities; or | ||
(3) receive an ownership interest in the financed | ||
facilities upon the dissolution of the agency or an undivided | ||
interest in the financed facilities at the time a public entity | ||
funds facility improvements. | ||
(e) A contract or other official action described by | ||
Subsection (c) may contain other terms and extend for any period on | ||
which all of the parties agree. | ||
(f) A public security issued for the purposes described by | ||
this section may include: | ||
(1) debt obligations issued in accordance with Chapter | ||
1207, 1331, 1371, 1431, or 1502, Government Code, or Chapter 271, | ||
Local Government Code; or | ||
(2) other types or forms of debt that the public entity | ||
is authorized to issue. | ||
(g) Each participating public entity may exercise any power | ||
of an issuer under Chapter 1371, Government Code. | ||
Sec. 163.090. DISSOLUTION. (a) The participating public | ||
entities of an agency may by concurrent ordinance dissolve the | ||
agency. | ||
(b) Concurrent ordinances dissolving an agency must: | ||
(1) contain identical provisions; | ||
(2) state that the agency will be dissolved upon the | ||
winding up of agency affairs; | ||
(3) direct the board or boards of the agency to wind up | ||
the business and affairs of the agency and to inform the | ||
participating public entities by resolution when the winding up of | ||
the business and affairs of the agency is complete; and | ||
(4) state the date on which the dissolution takes | ||
effect, provided that the date provides sufficient time for the | ||
board or boards of the agency to wind up agency affairs. | ||
(c) The participating public entities may not dissolve an | ||
agency if the dissolution will impair the rights or remedies of | ||
holders of obligations issued by the agency. | ||
(d) The dissolved agency continues to exist to: | ||
(1) satisfy existing liabilities or obligations; | ||
(2) collect, distribute, or liquidate its assets; and | ||
(3) take any other action required to adjust and wind | ||
up its business and affairs. | ||
(e) The assets of the dissolved agency that remain after all | ||
liabilities or obligations of the agency have been satisfied shall | ||
be distributed to the public entities that created the agency. The | ||
public entities shall establish the method of distribution by | ||
agreement. | ||
(f) An agreement between a public entity and an agency | ||
entered into before September 1, 2015, regarding the distribution | ||
of the agency's assets after dissolution is enforceable according | ||
to the terms of the agreement, regardless of a provision to the | ||
contrary in this subchapter. | ||
SECTION 4. The changes in law made by this Act apply only to | ||
a transmission facility for which construction began on or after | ||
the effective date of this Act. | ||
SECTION 5. This Act takes effect September 1, 2015. | ||
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