The Senate Committee on Business & Commerce has published its report to the 82nd Legislature. Below is a summary of the recommendations.
Interim Charge 1 – Study the implementation of H.B. 4409 enacted by the 81st Legislature pertaining to the financing of insured losses in excess of premium and other revenue of the Texas Windstorm Insurance Association (TWIA). Assess the coverage and affordability of TWIA policies. Review the claims and payments processes and make recommendations to improve the stability of TWIA while enhancing services to clients.
Interim Charge 1 Recommendations:
Coverage and Affordability
1) Current coverage and affordability limits should be revisited; they are higher than appropriate given the level of risk that exists in the TWIA coverage area.
Claims and Payments Process
2) Consider alternative claims handling procedures.
3) Consider alternative methods of addressing customer dissatisfaction with policy payments prior to or in lieu of large-scale lawsuit settlements.
4) Take appropriate steps to motivate private insurers to write policies along the Gulf Coast, such as the consideration of more storm-resistant building standards.
Stability of TWIA and Service to Clients
5) Review TWIA’s short term commercial paper program, particularly with respect to liquidity.
6) Seriously and positively consider the purchasing of reinsurance by TWIA.
7) Look into other options for the financing of TWIA losses in excess of premium, with a strong emphasis on bond ratings, liquidity, and the effects of a large event on Texas GR and cost spreading throughout the state through insurance assessments.
Interim Charge 2 – Study options for reducing demand for electricity, including innovative pricing options relating to the use of smart meters, programmable thermostats, and other demand side management and behavioral response strategies. Review current consumer education programs to reduce demand, decrease energy prices, and improve air quality. Consider benefits and costs of alternative energy sources such as geothermal and solar, and current incentives for electric and plug-in hybrid electric vehicles. The study should include recommendations on improving consumer knowledge and usage of these strategies in lowering overall electric usage, promoting energy efficiency, and improving the reliability of the ERCOT grid.
Interim Charge 2 Recommendations:
1) More aggressive demand side management programs to reduce demand.
2) Adoption of dynamic pricing tools to reduce demand during peak hours.
3) Increase energy efficiency goals based on demand growth or adjusting goal measurements to peak demand.
4) Creation of an Energy Efficiency Council to coordinate efficiency programs, collect data and help implement state wide energy efficiency goals.
Interim Charge 3 – Study and make recommendations relating to the development and implementation of wind energy. Assess the total impact of wind energy, including additional costs to consumers, if any, buy-back provisions and pricing, the need for alternative energy sources at times when wind does not generate electricity, impact on the ERCOT grid, development of battery storage and other storage methods, and economic development impacts.
Interim Charge 3 Recommendations:
1) Encourage diverse energy portfolios to help mitigate intermittency and associated reliability issues through adoption of a non-wind RPS; should account for solar as well.
2) More aggressive demand side management programs to help offset reliability issues associated with intermittent energy sources such as wind.
3) Create a third class of assets for storage, outside of generation or transmission classification, for the purpose of ownership and operation.
4) Encourage development of wind-related manufacturing entities, as well as other related maintenance operations and associated firms, to promote employment.
Interim Charge 4 – Study the generation costs of municipally owned electric utilities’ planned generation portfolios. Consider the impact of planned generation costs on electric rates for residential and commercial customers. Solicit input on the impact of future electric rates on charitable and non-profit organizations, and the impact on such organizations’ cash assistance programs to indigent customers. Consider the merits of a justifiable planned generation cost standard, and whether a deviation above the standard should be subject to approval by a vote of all customers of a municipally owned utility’s service area.
Interim Charge 4 Recommendations:
1) Municipally owned utilities generation planning remain outside PUC review.
2) Conduct affordability or cost containment studies in any rate increase situation.
3) Use affordability studies to determine what acquisition of certain resources would mean for different types of customers’ rates.
Interim Charge 5 – Study and make recommendations relating to the Texas Unemployment Compensation Insurance system, including, but not limited to, the following:
- The capacity and efficiency of the claims filing and benefits delivery system as well as the ability of the agency to meet the needs of the clients it serves given the transition to call centers and web based filing;
- The current financing scheme for the Unemployment Compensation Trust Fund, and any options to improve the long term financial health and stability of the Fund;
- The use of debit cards for delivery of UI benefits, including ways to limit user fees to access payments; and
- Improving public access to local and statewide data on current and historical UI claims.
Interim Charge 5 Recommendations:
1) Allow Texas Workforce Commission (TWC) to continue its current expansion of its internet application system while maintaining telephone service as an option for claimants.
2) Carefully consider future borrowing options by the Commission, with a particular focus on the stability of the federal government’s loan interest rate as well as unanticipated costs resulting from the sale of bonds.
3) TWC should continue its current policy, offering both a debit card and direct deposit option. Also, TWC should give special attention to complaints from claimants and maintain a separate complaint log should the Legislature review this policy at a future date.
4) Consider limiting the items that can be purchased with the debit card, for example, alcohol or tobacco products.
5) Consider creating set-denomination gift cards that can be placed with similar items in retail outlets; gift cards should be purchased by the public and donated to unemployed individuals or charitable institution for further distribution.
Interim Charge 6 – Study and make recommendations regarding career-focused education and workforce training programs in Texas to insure that such programs meet business and worker needs. Specifically, study whether such programs: meet the current and future workforce needs of health care, skilled trades, construction, manufacturing, aerospace, information technology and green jobs; help retain workers in such trades and fields; retrain and update the skills and education of workers in such trades and fields; and foster and encourage collaboration between the State, education, labor and business to provide education and training.
Interim Charge 6 Recommendation:
1) Consider continuation and expansion of career-focused education and workforce training programs, should budgetary conditions allow; program demand exceeds availability.
Interim Charge 7 – Study the effectiveness of Chapter 557 of the Insurance Code, relating to insured property subject to a security interest, in setting forth the obligations of a lender and a residential real property insured resulting from an insurer’s payment of a claim for damage to the residential real property caused by a natural disaster. Consider the legislation’s requirements for release of the insurance proceeds, lienholder’s approval of payment of the insurance proceeds, accrual and payment of interest on such proceeds and penalties provided by the statute. Make recommendations for any needed refinements of the legislation.
Interim Charge 7 Recommendation:
1) Continue to monitor this issue, keeping in mind the current uncertainty with respect to federal consumer protection regulation following the passage of the Dodd-Frank Act.
Interim Charge 8 – Monitor the implementation of legislation addressed by the Senate Committee on Business & Commerce, 81st Legislature, Regular and Called Sessions, and make recommendations for any legislation needed to improve, enhance, and/or complete implementation.
Interim Charge 8 Recommendations:
1) Extend the current state financial regulatory structure to enable consumer protection in home mortgaging servicing.
2) Carefully consider legislation resulting from a working group under way at time of this report’s writing.
A copy of the complete report can be found by visiting:
http://www.senate.state.tx.us/75r/Senate/commit/c510/c510.InterimReport81.pdf