Author Archive

Weatherford Democrat

Christin Coyne

Governor Rick Perry vetoed $154 million in health insurance appropriations for faculty and staff of community colleges in a line item veto in the state budget last Friday.

All 50 Texas community colleges will lose employee health insurance funding in 2009, though they will receive funding in 2008.

Weatherford College President Joe Birmingham said the veto means Weatherford College will not be receiving approximately $1.4 million in state funding it had been expecting.

The college now faces an overall decrease in state funding for the 2009 fiscal year when it had been expecting an increase of 3.4 percent over current funding.

A rider in the budget states that employees paid by school revenue other than funding from the state may not receive benefits paid for by state funding.

“Community colleges have violated this provision, using millions of state dollars annually to pay the benefits of non-state paid employees. To get money for these employees, community colleges falsified their appropriations requests,” Perry said in his explanation of the veto.

Birmingham called the statement insulting and disappointing.

“There is no way to describe that [statement] except as patently false. We really take issue on that,” Birmingham said.

Birmingham said Weatherford College will now face several options: Reducing programs and services, increasing tuition and fees far beyond the normal increase, increasing the property tax rate, or some combination. He said the college will not be considering action until next spring.

“We had no knowledge that it was even an issue,” Birmingham said of the veto.

“It’s very, very frustrating. I didn’t find out about it until after the fact,” Representative Phil King said. “It’s particularly frustrating because I had worked very hard with the Higher Education Committee and with Appropriations to try to get additional funding for Weatherford College and … compared to the other colleges they came out well.”

King said to his knowledge no one else knew before the fact, either.

Perry’s proposed budget would have appropriated approximately $205 million for community college health insurance funding.

“Sad thing is, there is really nothing we can really do about it at this point,” King said, because the governor has the authority to line item veto. “If we get called back into special session, we will absolutely file an appropriations rider to try to correct that. Otherwise, lawmakers will have to wait until the next legislative session, which begins in January 2009, to try to restore funding.

Senator Robert Duncan, R-Lubbock, is on the Senate Finance Committee and is one of five senators on the Legislative Budget Board.

Deon Daugherty Allen, spokesperson for Duncan, said Duncan agrees with the governor that many community colleges did not report their numbers in compliance with the proportionality statute, but the Legislature has allowed them to do it for years. He did not see the veto coming, either.

Duncan does not like the governor’s statement because he believes 23 colleges are in compliance with the statute.

Weatherford College is on the list of schools Duncan believes are complying with the statute.

One possibility Duncan is looking into is having the Legislative Budget Board recommend the governor issue a budget execution order to restore funding to the colleges. The Legislature does not have to be in session for the board to meet.

Perry issued a budget execution order in 2005, which included $295 million for school textbooks.

Steven Johnson, spokesman for the Texas Association of Community Colleges, said the administration has had a legitimate policy disagreement over the proportionality of funding for community colleges, but there have never been claims that the schools falsified information.

Community colleges have been filling out their Legislation Appropriation Requests (LARs) the same way for the past three or four budget cycles, Johnson said, and none of the governor’s concerns were mentioned when educational funding hearings were held last fall.

Each school fills out its own LAR and is a distinct entity when dealing with the state. Johnson said he does not know of any college that falsified information.

Weatherford Democrat

Galen Scott

An omnibus bill that would have changed Texas compensation rules for land seized by eminent domain was among 49 bills Gov. Rick Perry vetoed Friday.

According to a statement released by the Governor’s Office Friday, Perry supported the bill in its original form, but withdrew support after a series of amendments were added during the final days of the legislative session. Perry singled out a pair of provisions he said amounted to “the creation of a new category of damages that are beyond the pale of reason.”

Specifically, Perry was at issue with an amendment expanding landowner damages to include compensation for “diminished” roadway access to property left over after an initial condemnation.

Condemning authorities are already required to provide reasonable access to the remaining land, but House Bill 2006 paved the way for additional compensation by requiring eminent domain commissioners to consider “loss of access” when determining dollar amounts. The bill also provided for the recovery of damages like changes to traffic patterns and visibility of the remaining property from the road.

If House Bill 2006 were to become law, Perry said state and local governments would be overpaying to acquire land through eminent domain in order to enrich a finite number of condemnation lawyers at the expense of Texas taxpayers.

“As someone who grew up in rural Texas, and farmed our family’s piece of land, I am a strong proponent of protecting private property rights,” Perry said in a statement. “But the issue is one of fairness to taxpayers, who will get fleeced in order to benefit condemnation lawyers.”

According to the Governor’s Office, Perry received letters from almost every fast-growth city and county asking him to veto the bill because the cost of constructing state and local projects would increase by more than $1 billion annually.

But up until about 14 years ago, landowners used to get some money for diminished access, according to Ed Small, legal council for the Texas and Southwestern Cattle Raisers Association.

“The state treasury didn’t go bankrupt prior to 1993 because of this and it wouldn’t go bankrupt if this bill were to become law,” Small said in a statement.

When House Bill 2006 made it through the Legislature, Texas Department of Agriculture Commissioner Todd Staples wrote of letter in support of the bill, addressing concerns that diminished access compensation would cost the government too much money.

“It simply restores some of the protections that have been eroded in recent years,” Staples wrote of House Bill 2006.

Perhaps more than any other single group, the The Texas Farm Bureau lobbied for the passage of House Bill 2006. In a statement released Monday the Farm Bureau said the bill amounted to “the most important property rights legislation in more than a decade.”

“With the projected growth of this state, takings will occur much more frequently for roads, reservoirs and other public needs,” the statement reads. “It is imperative that we treat property owners, urban and rural alike, fairly.”

Because the bill was a conglomerate of eminent domain legislation, including contributions from five authors and more than 20 coauthors, a variety of issues were addressed. State Rep. Phil King (R-Weatherford), one of the bill’s coauthors, included a number of items he said are meant to stop eminent domain abuse by pipeline companies in Parker and Wise Counties.

More than 18,000 miles of active oil and gas pipelines already exist in Parker County, and with experts predicting exploration in the Barnett Shale will remain cost effective for decades to come, pipeline eminent domain is expected to stay in the limelight.

King’s legislation would have given landowners the right to a notice of the pipeline company’s intent to condemn, fair notice of the scheduled hearing on the condemnation, the right to a reasonable delay to prepare for the hearing and the ability to object to special commissioner appointments they feel represent a conflict of interest. Texas landowners are not currently entitled to any of those provisions.

A few hours before Perry announced his veto, King said he was on the phone with Perry’s legislative assistant, advocating the bill’s final passage.

“[Perry] is getting just tons of pressure from cities, counties and TxDOT to veto it, because of how it increases the cost of eminent domain for roads and highway construction,” King said. “And, of course, it does. But my perspective is, if you’re going to forcibly take someone’s property away, you better pay them reasonably well — at least fair-market value.”

Personally, King said he believes landowners should be allowed to sue for loss of access, but if including those provisions meant killing the bill, he said they should have been stripped in conference committee. According to King, Perry warned the bill’s authors he was under pressure to veto if the amendments weren’t taken out.

“It’s a big, long bill and that was just an amendment that got put on at the last minute by the Senate,” he said of the diminished access provision.

In the wake of Kelo v. City of New London, a 2005 U.S. Supreme Court case that raised grave concerns about the use of eminent domain to buoy private enterprise, House Bill 2006 would have limited eminent domain use in Texas to “the state, a political subdivision of the state, or the general public.”

The bill also required condemning authorities to hold public meetings and record votes before condemning private property. Water and sewer companies would have been barred from condemning property to gain access to groundwater, an increasingly sought-after resource in North Texas.

Additional requirements were placed on purchase offers made prior to the initiation of condemnation proceedings and landowners would have been allowed to buy back condemned property for the initial purchase price, if the land is no longer in public use after a period of 10 years.

“We’ll just have to do the bill again next session,” King said.

Contact Information:
(817)596-8100

Austin – State Representative Phil King (R-Weatherford) today laid out the following summary to explain the duties and powers of the Upper Trinity Groundwater Conservation District would be, if confirmed by the voters of Parker, Wise, Hood, and Montague counties. The district was enabled through S.B. 1983, legislation that passed during the recently concluded 80th Texas Legislative Session. Rep. King was the House author of the bill.

Summary of Composition/Powers and Duties of the Proposed Upper Trinity Groundwater Conservation District

• Composition of district and board of directors:

o The district will be comprised of Hood, Montague, Parker, and Wise counties.

o An election to confirm the creation of the district by the voters of the district must take place before September 1, 2009, otherwise the district is dissolved.

o The district will be governed by an 8-member board of directors, comprised of 2 directors from each county. The commissioners court of each county in the district will appoint 2 members from their county.

o Directors serve staggered four-year terms, with the term of one director from each of the four counties expiring on June 1 of each odd-numbered year.

• Powers and duties of district:

o Residential wells and wells that are used for the purposes of raising livestock or poultry, that do not exceed 25,000 gallons of usage a day, are exempt from the permitting and fees requirements of the district.

o The district may NOT exercise the power of eminent domain.

o The district may NOT impose taxes upon the residents of the counties within the district’s boundaries. The district is to operate strictly from fees collected from water usage of permitted wells.

o Any well that is completed on or before the date the district adopts the spacing requirements is exempt from the spacing requirements of the district. The district may pull a well’s exemption if said well is modified to substantially change its capacity after the spacing requirements are set by the district.

o The district may require any well, regardless of the use of the groundwater from that well, to comply with the well spacing requirement that they put in place.

o The district may require any well to be registered with the district in order to protect it through minimum well spacing distances for future wells. The district may require a well’s usage, except exempt domestic and livestock wells, to be reported to the district.

o The board is given the ability under current law to set reasonable fees for violations of the district’s requirements. In lieu of, or in addition to the above remedy, the district may impose extra fees it deems to be necessary, in order to discourage unauthorized and abusive groundwater pumping.

o The district may charge fees for water usage from any well that has a permit in the district. Since residential and livestock wells are exempted from permitting, they do not fall under the requirement to pay fees.

o The district may not charge fees to exceed: (1) $1 per acre-foot annually for groundwater used for agricultural purposes; or (2) 30 cents per thousand gallons annually for groundwater used for nonagricultural purposes.

o The district by rule may establish a temporary or permanent discounted fee rate for persons who prepay production fees to the district on or before the dates established by district rule.

Wise County Messenger

Staff

State Rep. Phil King, R-Weatherford, said that one new sergeant and two new commercial vehicle enforcement officers from the Department of Public Safety will be stationed in Wise County this year.

The added troopers are an effort to reduce the number of truck-related fatalities in the county.

“This is great news,” said King. “We’ve (had) so many trucks on the road in Wise County. There’s just no margin for error. We have to reduce these accidents. Wise County has the fourth highest rate of truck related fatalities in the state.”

King met with DPS Director Col. Tommy Davis during the legislative session to discuss the problem. Davis committed to “deploy additional resources,” and King worked with the House Appropriations Committee to obtain funding for the new positions.

The new officers will operate the new weigh station on Texas 114 outside of Bridgeport and conduct safety inspections throughout the country, King said.

Construction of the new weigh station will begin next month.

The new troopers will be stationed at the Decatur DPS office, which now has 20 trooper positions and two sergeant positions.

Weatherford Democrat

Galen Scott

*Personal Note from Representative King:

I wanted to add here that I did successfully get the bill discussed in this article ammended on to HB 2982, which finally passed the legislature and will be effective on January 1, 2008. In the article Mr. Scott correctly states that the bill I carried (HB 913) was left pending in Senate committee. This bill will enable the counties where the portable drilling rigs are actually being used, to see the benefits of the tax revenues from these rigs.*

Big trucks and the gas drilling industry, in particular, are damaging some Parker County roads so much that they are becoming dangerous, according to Precinct 3 Commissioner John Roth, and even if his road and bridge budget doubled, it still wouldn’t be enough to keep up, he said.

After recently driving roads in Johnson County, where Barnett Shale exploration developed more rapidly, Roth decided to air his concern with members of the Parker County Commissioners Court. He said the edges of some Johnson County roads are “beat out” all the way to the middle.

“I’m afraid that our roads are going to end up just like theirs,” he said during the Court’s June 6 regular meeting. “We’re headed that direction and it’s dangerous and I want to enter into this debate before it gets absolutely horrible.”

Roth acknowledged heavy trucks not associated with the drilling industry are also to blame, and said gas operators shouldn’t foot the entire repair bill because some Parker County roads weren’t exactly in great shape to begin with. But Roth was crystal clear about which user he believes is responsible for most of the recent roadway impairment.

“The roads are breaking down,” he said. “I think the [oil and gas] industry has had a significant impact in the last two years on the number of overweight vehicles and what they’re doing to the roads.”

Precinct 4 Commissioner Jim Webster, whose territory contains the vast majority of new gas wells in Parker County, agreed the situation has become a problem. He said some roads in his Precinct have already lost 2 feet of surface on either side and there is no longer enough room for a passenger vehicle to pass an 18-wheeler without somebody moving over.

“You will be killed if you don’t get into the shoulder and that is a fact,” he said. “We have dangerous safety issues to consider here.”

Roth said tax revenue produced by gas wells is just not enough to offset the damage caused by trucks involved in Barnett Shale production and that he doesn’t have enough road and bridge money to adequately maintain his precinct’s roads.

The Parker County Appraisal District reported Precinct 4, which represents the southeast quadrant of Parker County, had the most new drilling activity last year with 74 new gas wells completed before January 1 2007. After the county’s road and bridge tax rate was applied to the collective valuation of those 74 wells, each one contributed an average of about $1,500 for the precinct’s road and bridge fund.

Roth contends $1,500 worth of damage is done when the big rigs, “roll their first tire down the road.”

He said he is not trying to start a fight with the oil and gas industry. He noted having several conversations with what he called the “major players” and said they have all expressed a willingness to ante up.

“We’re pretty much building and maintaining the roads for this industry and charging them pennies on the dollar for what it’s costing us,” Roth said. “I need to double my budget and that’s not going to get us far enough; it’s going to put us closer to not falling behind as fast as we are now.”

At Roth’s behest, State Rep. Phil King (R-Weatherford) agreed to request an opinion from Texas Attorney General Greg Abbott regarding the legality of county-imposed impact fees, which would tax the operator of each new drilling location. As a general rule, King said industry ought to carry its own load.

“If industry is specifically causing damage to roads, then that industry needs to be specifically liable for it,” he said. “There is no question that the industry is … it takes an average of 40 truck loads to move one rig, and then you’ve got all the water trucks and everything else.”

In order to address deteriorating roadway conditions last year, the Commissioners Court began requesting a voluntary payment of $25,000 for each operator’s first well, and $5,000 for each following well. County Treasurer Jim Thorp said some operators will occasionally contribute a few thousand dollars “here and there,” but to date, he said the county has not received any larger voluntary payments.

King submitted a bill this year, which would have allowed the county in which a drilling rig is located on January 1 to levy ad valorem taxes against the value of the equipment. Previously, those taxes were paid to the county where the rig’s owner was based. The extra revenue was touted to help Barnett Shale counties compensate for emergency services and road maintenance associated with the drilling boom, but King’s bill was left pending in a Senate Committee.

Economic benefits produced by exploration should compensate for the cost of maintaining county infrastructure, according to King. In fact, a recent study concluded the 14-county core area of the Barnett Shale realized $5.2 billion worth of new economic activity last year. King compared road damage associated with the Barnett Shale to problems on Interstate-35, a highway Texans pay to maintain even though trucks using the route are headed to destinations throughout the nation.

“All these other entities are benefiting from the economic benefit that is coming with the development of the Barnett Shale, but the money to offset to the infrastructure costs is not getting back to [the road and bridge fund] where it needs to be,” King said.

County-wide taxing entities that receive a cut of the revenue generated by gas wells include Weatherford College, the Parker County Hospital District, the county’s general fund and the lateral road and bridge fund. Taxes associated with eight of the school districts in Parker County are levied at a rate more than 10 times the road and bridge rate.

Nevertheless, Roth said he wanted to be clear that he doesn’t favor increasing the road and bridge tax rate because doing so would, “make everybody else finance the damages that one particular industry is causing.”

Commissioner Webster suggested he would favor new taxes on mineral owners and operators alike. If he was fortunate enough to own minerals, Webster said he would be glad to pay a “spud-fee,” which is a fee paid when drilling commences.

“I would like to see a tax imposed on the mineral owners, or a spud fee, and also on these oil companies,” Webster said. “I don’t know if we can do that, but why should non-mineral-rights people subsidize the oil companies and subsidize the mineral owners who are enjoying the fruits of Parker County?”

Exactly how the county will address the road situation remains to be seen.

Depending on a number of legal issues, the Court could perhaps vote to levy a tax on operators, increase overweight enforcement and fines, tax mineral owners, realign tax revenue distributions, issue debt, earmark bond money or raise county-wide tax rates. King allowed finding a local solution could require legislation and said he would not favor a county-wide tax increase.

“The school districts, the cities and the county general fund are all benefiting from this greatly, because you have an industry coming in here and generating a lot of tax revenue,” Roth said, adding those entities aren’t really responsible for supplying services to the oil and gas industry. “It’s basically money sitting there, is what it is. So there are a lot of huge benefits economically, but it’s totally lopsided. We’re providing all those other entities a tax source by providing the operators a way to get their trucks to the rig.”

County Judge Mark Riley warned that if a financial instrument is selected to bolster the road and bridge fund, the Court will need to be specific about how the money is used. Commissioners agreed to revisit the issue during a future meeting.

Wise County Messenger

By Brian Knox

State Rep. Phil King, R-Weatherford, talked to the Decatur Rotary Club and guests Thursday about the good, the bad and the ugly of the recently completed 80th Texas legislative session.

The good, in King’s opinion, included passing legislation dealing with eminent domain issues, the state budget, the “death” of the Trans-Texas Corridor and funding for clean technology for producing electricity.

Eminent domain

King served on a committee dealing with eminent domain issues and said he heard “horror stories from across the state that would make your blood boil.”

“There were entities across the state taking excessive advantage of people,” King said. “The (Dallas) Cowboys stadium in my mind is one of them.”

Locally, he said most of the eminent domain issues deal with pipeline companies. He said the legislation will require a property owner’s bill of rights be issued to landowners in eminent domain cases.

King said that the governor is being urged to veto the bill.

State budget

King said he was proud of the state’s $150 billion budget passed by legislators which will work out to a 3.5 percent increase each year during the two-year budget period. The budget includes $7 billion in a “rainy day fund” and a $600 million tax cut through the elimination of the telecommunications infrastructure fee on phone bills.

“That is really a great budget and no new taxes,” King said. “Existing revenue will cover that.”

Toll road development

King said that Senate Bill 792 “effectively kills the Trans-Texas Corridor.” The bill will put a two-year moratorium on comprehensive development agreements.

“It prohibits any future toll roads from being owned by foreign private firms,” King said, referring to the public outcry against the use of a Spanish-American firm in the developing of the TTC.

The bill will also provide “greater public access to information” regarding toll roads.

When asked by Decatur Mayor Joe Lambert how the state could address the need to ease traffic congestion, King said he likes a plan to expand U.S. 281, a road that runs nearly parallel to Interstate 35 about 50 miles west.

Clean energy

King explained that the reason electricity prices are so high in Texas is because most of the electricity is produced from the burning of natural gas. With gas prices high, that creates high prices for electricity.

He said a $30 million incentive fund for research and development of clean technology for producing electricity has been created to help ease that burden.

The use of nuclear power, for example, would not cost a penny to generate electricity, he said.

“These (nuclear power plants) are safe. They are building them all over the world except in America because frankly we wimped out to all the environmental folks over the past 30 years. It’s the cleanest and cheapest form of electricity out there,” he said.

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The bad included some items King wants to see the governor veto such as a tax reform bill. It also included other legislative items he wanted to see made into law which didn’t pass, such as requiring voters to show photo identification and homeland security legislation.

Photo identification to vote

In response to evidence of voter fraud, King said he worked to get a bill passed which would have required voters to show a photo identification.

King said he checked with the state’s most populous counties and found that thousands of people had been removed from the voter rolls because they were not U.S. citizens. Many of those people were discovered when they were called to jury duty.

“If that many were found by accident, then you’ve got to assume there are tens of thousands of more that are on there who are not U.S. citizens but are registered to vote,” he said.

That led to some “ugly” moments of the session. “We were called bigots, that (we) were doing this to suppress minorities or others from being able to vote. That wasn’t the case at all. We were trying to protect the integrity of the voting system. You can’t rent a movie without showing a photo ID. It’s ridiculous to think that you should be able to exercise our highest right in the land without going in there and showing a photo ID.”

The bill passed the house but not the senate.

King said he filed a bill which would have required the secretary of state to verify U.S. citizenship when a person registers to vote.

Homeland security

King said the state legislature’s hands were tied in many ways when it came to border security.

“We looked hard trying to find things we could do, but it’s a federal issue,” he said.

“For the life of me, I don’t understand why we don’t have tens of thousands of troops at the border.”

Legislators were unsuccessful, King said, in passing a border crime initiative bill which would have prohibited some cities from providing “safe harbor” for non-U.S. citizens. Some cities now do not let officers arrest anyone on an illegal immigration offense, he said.

Tax reform

King said he hopes the governor will veto a bill which revises the franchise tax.

“I think it still puts too much pressure on small businesses and provides too many loopholes for the larger entities which we are trying to close,” he said.

Wise County Messenger

Phil King

Recently I have been hearing questions about whether or not the Barnett Shale was really good for anyone other than the mineral owners and oil and gas companies in Texas. The Barnett Shale does bring both good news and bad news to Parker County.

On the good side, the economic impact of the Barnett Shale can most noticeably be seen in the estimated 108,000 Texans with jobs related to the gas boom. A recent study by the Perryman Group, an economic and financial analysis firm, identified that the economic impact of the Barnett Shale play will be responsible for $10.8 billion in economic output each year.

The bad side is, of course, the stress on our roadways from wear and tear, increased truck traffic, increased accidents involving large trucks, the expansive new pipelines and the general noise and nuisance near drilling locations. To counter the negatives that come along with all of the drilling and increased traffic on our roads, this past legislative session I authored several pieces of legislation.

I authored an amendment to H.B. 2982 that will bring the tax revenue from portable drilling rigs into the counties where the rigs are actually being used, instead of their principle place of business (most companies are based in Houston). We secured funds for increased truck inspectors in the DPS budget which will help ensure that the trucks traveling on our roads are safe and following the law. I authored provisions of the eminent domain bill, H.B. 2006, which has several landowner protections to help protect the private property rights of residents dealing with common carrier pipeline companies. I also authored and passed H.B. 630, a bill that requires drilling companies to give notice to surface landowners before they come on to begin drilling.

I also carried a bill in the House, S.B. 1983, which will create, pending voter approval in November, the Upper Trinity Groundwater Conservation District. The district will have the unique power to regulate water wells that are used to drill and frac gas wells through spacing and reporting requirements. The district will be funded through permit fees on commercial (non-agricultural and non-residential) wells. The district would be the only groundwater district in the state to have these powers over gas producers.

As you can see there are great benefits to having responsible drilling taking place in our county, but it is also important that the drilling companies carry their share of the load and not leave the taxpayers with the burden of repairing the roads that they benefit from using. I hope that the Legislature’s efforts will help to elevate concerns for our county road system while helping to provide a free market approach to continuing to grow job opportunities in our community.

The Perryman Report can be downloaded as a PDF here.

Phil King
State representative
District 61
Weatherford

Contact Information:
(817)596-8100

Austin – State Representative Phil King (R-Weatherford) announced today that Wise County will be receiving one new Sergeant and two new Commercial Vehicle Enforcement (CVE) Officers from the Department of Public Safety this year.

King met with DPS Director, Colonel Tommy Davis, during the legislative session to discuss the high number of truck related traffic accidents in Wise County. Colonel Davis committed to deploy additional DPS resources. King then worked with the House Appropriations Committee to obtain funding for the new positions.

King stated, “This is great news. We’ve have so many trucks on the road in Wise County. There’s just no margin for error. We have to reduce these accidents. Wise County has the fourth highest rate of truck related fatalities in the state.”

King went on to explain that the troopers will be operating the new weigh station on Highway 114 outside of Bridgeport and conducting safety inspections throughout the county. Construction on the new weigh station begins July 23rd. The new troopers will be stationed out of the Decatur DPS office.

Contact Information:
(817)596-8100

Austin – An expansive bill that would have lowered retail electric rates and increased consumer protections was killed on a hyper-technical procedural motion on Monday night. SB 482, sponsored by Representative Phil King (R-Weatherford), included a process to scrutinize the pending $45 billion buy-out of TXU by private investors.

King said, “Over two thirds of the House voted for this legislation last night. It is disappointing that one member chose to kill this bill, which provided rate reductions for electric bills, real consumer protections, and more stringent oversight of public utility buy-outs.”

SB 482 would have:

• Guaranteed a rate cut for customers on the highest rates in Texas
• Authorized the PUC to review rates and adjust them if they rise unjustifiably
• Protected consumers by:
  • eliminating the use of credit scoring
  • protecting critical care, elderly low-income, and low-income customers from disconnection who enter into five month deferred payment plans
  • prohibiting disconnection of any customer on any day when the temperature is below freezing or above 100 degrees
  • eliminating deposits for service for elderly low-income customers
  • barring deposits for electric service for customers with 12 months of positive bill payment history
  • eliminating deceptive advertising by utilities with regard to the level of service a customer will receive by selecting the incumbent retail electric provider
  • eliminating any cancellation fees for month-to-month contracts for electricity
• Required the functional separation of TXU into four smaller companies and forced each of these companies to:
  • use separate and distinct names and logos
  • operate under exclusive boards of directors with no overlap
  • retain separate officers with no overlap
  • maintain separate headquarters, operations facilities and other office space
  • maintain arm’s length relationships and not share any information among the several companies that could be used to manipulate the market or exercise market power abuse
  • adhere to an enhanced PUC code of conduct in all business transactions with their respective companies
  • require preparation of separate financial statements
  • provide the PUC complete access to all books and records
  • mandate that each CEO sign an affidavit of compliance yearly under threat of felony prosecution
  • Prevented TXU from shifting debt onto the ratepayer-funded wires and poles company.
• Accelerated retail competition by requiring affiliated retail electric providers (TXU, Reliant and Direct Energy) to gain customers outside their service territory or face fines. The fines will be used to fund any unfunded portion of the System Benefit Fund.
• Allowed monies appropriated for the System Benefit Fund to be used for its intended purpose and expanding eligibility for low income discounts on electricity.
• Increased the authority of the PUC to investigate and punish market power abuse. Specifically, the PUC would have now had the ability to assess fines of up to one million dollars a day or treble damages.

“Consumers are going to be hurt because SB 482 was killed. It is a shame when petty partisan differences stand in the way of good public policy,” explained King.

King did proclaim a victory with the last minute passage of HB 624 and HB 1386. HB 624 , the last bill passed by the Legislature, empowers the state to enforce the commitments made to consumers by KKR, the buyers of TXU. These commitments (see following pages) required of KKR are very substantial and provide many protections demanded by legislators and consumer groups. The bill also gives the PUC oversight of future sales of certain electric utilities.

HB 1386 opens the door for construction of nuclear power plants in Texas, which will provide clean, less expensive electricity.

You can view SB 482 online here.

You can view HB 624 online here.

You can view HB 1386 online here.

Commitments Enforced by HB 624:

• Name Change Commitment – TEF committed to changing the name of TXU Electric Delivery Company to Oncor Electric Delivery Company on or before closing of the transaction. And, in fact, the name of TXU Electric Delivery Company was changed to Oncor Electric Delivery Company on April 24, 2007. Oncor’s logo will be separate and distinct from the logos of the parent, TXU Corp., the retail electric provider, which will retain the TXU Energy name (TXU Energy Retail), and the power generation company, which we expect to rename with the Luminant Energy brand. TXU Corp. commits to maintaining a name and logo for Oncor that is separate and distinct from the names of TXU Corp.’s retail electric provider and wholesale generation companies.
• Separate Board Commitment – At closing and thereafter, Oncor will have a separate board of directors that will not include any members from the boards of directors of TXU Energy Retail or Luminant.
• Separate Headquarters Commitment – Within a reasonable transition period after closing of the transaction, not to exceed 6 months, Oncor’s headquarters will be located in a separate building from the headquarters and operations of TXU Energy Retail and Luminant.
• No Transaction-Related Debt at Oncor Commitment – Oncor will not incur, guaranty or pledge assets in respect of any incremental new debt related to financing the transaction at the closing or thereafter. Oncor’s financial integrity will be protected from the separate operations of TXU Energy Retail and Luminant.
• Debt-to-Equity Ratio Commitment – Oncor’s debt will be limited so that is regulatory debt-to-equity ratio is at or below the assumed debt-to-equity ratio established from time to time by the PUC for ratemaking purposes, which is currently set at 60% debt to 40% equity. For ratemaking purposes, in its scheduled rate cases in 2007 and 2008, Oncor will support a cost of debt that does not exceed Oncor’s actual cost of debt immediately prior to the announcement of the transaction.
• Capital Expenditure Commitment – Following the closing of the transaction, Oncor will continue to make capital expenditures consistent with the capital expenditures in Oncor’s business plan. Total capital spending will depend in part on economic and population growth in Texas, as well as permitting and sitting outcomes. However, in any event, over the five years following the year in which closing of the transaction occurs, Oncor will make capital expenditures in connection with its transmission and distribution business in an aggregate amount of more than $3.0 billion.
• DSM/Energy Efficiency Commitment – Over the five years following the year in which closing occurs, subsidiaries of TXU Corp. will expend an aggregate of at least $200 million on demand-side management/energy efficiency programs (DSM) over the amount included by the PUC in Oncor’s rates. This commitment will approximately double the level of spending on DSM currently included in Oncor’s rates. Oncor will not seek to recover in rates any of the $200 million in incremental DSM expenditures.
• Service and Safety Commitment – Oncor will support the inclusion of negotiated commitments with appropriate stakeholders regarding reliability, customer service and employee safety in any final order regarding the transaction issued pursuant to PURA Section 14.101.
• Rate Case Commitment – If, for any reason, the PUC has not initiated a general rate proceeding for Oncor or its predecessor prior to July 1, 2008, Oncor will not later than that date file a general rate case at the PUC, consistent with its currently effective settlement agreement with certain municipalities.
• Continued Ownership Commitment – TEF will hold a majority of its ownership interest in Oncor, in the current regulatory system, for a period of more than five years after the closing date of the transaction.
• Holding Company Commitment – A new holding company, Oncor Electric Delivery Holdings, will be formed between TXU Corp. and Oncor.
• Independent Board Commitment – Each of Oncor Electric Delivery Holdings and Oncor will have a board of directors comprised of at least nine persons. A majority of the board members of each of Oncor Electric Delivery Holdings and Oncor will qualify as “independent” in all material respects in accordance with the rules and regulations of the New York Stock Exchange, from TXU Corp. and its subsidiaries (including TXU Energy Retail and Luminant), TPG and KKR. Consistent with TEF’s commitments, the directors of Oncor and Oncor Electric Delivery Holdings will also not include any members from the boards of directors of TXU Energy Retail or Luminant.
• Affiliate Asset Transfer Commitment – Neither Oncor Electric Delivery Holdings nor Oncor will transfer any material assets or facilities to any affiliates (other than Oncor Electric Delivery Holdings, Oncor and their subsidiaries), other than such transfer that is on an arm’s length basis consistent with the PUC’s affiliate standards applicable to Oncor, regardless of whether such affiliate standards would apply to the particular transaction.
• Arm’s Length Relationship Commitment – Oncor Electric Delivery Holdings and Oncor will maintain an arm’s length relationship with TXU Corp. and its subsidiaries (other than Oncor Electric Delivery Holdings, Oncor and their subsidiaries) consistent with the PUC’s affiliate standards applicable to Oncor.
• Separate Books and Records Commitment – Oncor Electric Delivery Holdings and Oncor will maintain accurate and appropriate detailed books, financial records and accounts, including checking and other bank accounts, and custodial and other securities safekeeping accounts that are separate and distinct from those of any other entity.
• Ten Percent Price Cut – As a result of the transaction, TXU Energy Retail will provide a 10 percent price reduction (applicable to certain residential rates that were in effect on December 31, 2006) for residential customers in its traditional service area who have not already selected one of TXU Energy Retail’s lower priced offers. Additionally, TXU Energy Retail customers entitled to receive the two remaining customer appreciation bonus payments of $25 per quarter will receive those payments.
• Five Year TXU Corp. Investment Commitment – In the current regulatory system, the investor group will commit to hold a majority of its ownership in TXU Corp. for more than five years after the transaction closes.
• Coal Unit Commitment – The planned coal units will be reduced from 11 to three. Plans to build the other eight coal units have been suspended and will be cancelled when the transaction is closed.
• Emerging Technologies Commitment – Significant resources will be invested in emerging energy technologies, such as integrated gasification combined cycle coal plants, including an increased commitment to renewable energy.

Contact Information:
(817)596-8100

Austin – Senate Bill 247, the “Stop the Darfur Genocide Act”, which Representative Phil King (R-Weatherford) was a co-sponsor of, passed the Texas House of Representatives unanimously today. The bill has already cleared the Texas Senate and is on its way to the Governor’s desk, pending a procedural vote tomorrow. Governor Perry endorsed the targeted divestment legislation in his inaugural address and State of the State speech.

SB 247 would require the Teacher Retirement System of Texas (TRS) and the Employee Retirement System of Texas (ERS) to engage and possibly divest from certain companies doing business in Sudan who substantially benefit the central government, provide little benefit to Sudan’s citizens, and who have failed to address their role in indirectly facilitating Sudan’s genocide.

With an approximate value of $426 million in targeted fund holdings, the financial impact of the divestment effort on the Sudanese government is substantial. The amount represents about 0.59% of the assets under management by ERS & TRS.

Rep. Phil King said, “Texans will not stand for their money be used to facilitate genocide. Today the Texas House passed a bill that will send that message loud and clear.”

Mark Hanis, Executive Director of the Genocide Intervention Network, said, “today’s actions by the Texas House of Representatives, combined with overwhelming bi-partisan support for Senate Bill 247, establish the state of Texas as a leader in the fight against the first genocide of the 21st Century. Texans should be proud to help lead the world in making ‘Never Again’ a reality.”