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.