Palacios Beacon (Palacios, Tex.), Vol. 54, No. 9, Ed. 1 Thursday, March 2, 1961 Page: 7 of 8
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Thursday, March 2,1961
PALACIOS BEACON, PALACIOS, TEXAS
Page 7
LET'S KEEP THE FACTS STRAIGHT
In order that the Electric Cooperative in Texas may get
out of an intolerable situation created when House Bill 547
was passed by the 55th Texas Legislature in 1957 we are
attempting to remedy this predicament by passing in the
present session of the Legislature H. B. 3 by Jaminson, et al,
and S. B. 7 by Krueger, et al, Amending Art. 1528 b V. C. S.
to authorize Electric Cooperatives to continue to serve in an
annexed area, which was a rural area before being annexed
by a town, and to have equal rights with the profit power
companies in rural areas served and developed by the Electric
Cooperatives.
A brief opinion as to the intent of H. B. 2 and S. B. 7
follows: This opinon was written by one of Texas’ foremost
attorneys, the Honorable Tom Reavley, former Secretary of
State, and now a member of the law firm of Powell, Rauhut,
McGennis, Reavley and Lockridge, of Austin, Texas, and
attorney for Texas Electric Cooperatives, Inc.
WHAT H. B. 2 (S. B. 7) DOES
“The wording of this Bill copies that of S. B. 312 which
was drafted in the Senate State Affairs Committee and pass-
ed by the Senate in 1957. It is designed to settle the problem
of the electric co-op in newly annexed areas of a town or city.
It amends the Electric Cooperative Corporation Act so
as to leave the ‘exclusive dominion and control every city
. . . has . . . over its public streets, sidewalks, alleys . . .’
However, ‘if a franchise is granted by the governing body
of the city ... it shall not embrace or include an area not
being served by the (electric co-op) ... at the time the area
became non-rural . . .
In other words, the city can decide for itself as to what
should be done about an electric co-op’s operation within
newly extended city limits. The city has no such option now,
because state law prohibits the connection by the co-op of
any new meter after annexation — whatever the wishes of
the co-op, or the city, or the individual upon whose premises
the meter would be placed — and wherever those premises
might be.
But the city would still be restricted by state law to allow
the co-op a franchise area no larger than the area served by
the co-op prior to annexation.
Finally, the proposed bill would eliminate the confusion
caused by the use of those words: ‘Central station service’.
So that while the present law speaks of service ‘to persons in
rural areas who are not receiving central station service’ the
law would be changed to permit ‘the furnishing of electric
energy to any structure, apparatus or point of delivery lo-
cated in a rural area.”
WHAT H. B. 2 (S. B. 7) IS NOT
1. IT IS NOT NEW.
“Nor was it drafted by the cooperatives. This language
was written by Senators Herring, Hardeman and Weinert
during the session in 1957. S. B. 312 of that session was
introduced by Senator Herring, and referred to the State Af-
fairs Committee under the chairmanship of Senator Lane.
Senator Hardeman was named chairman of the subcommit-
tee to which it went. The bill was rewritten and ultimately
passed the Senate. The only difference between S. B. 312 as
passed by the Senate in 1957 and H. B. 2 (S. B. 7) now is in
the caption and emergency clause; the body and effect of
the two bills is precisely the same.
2. IT DOES NOT AUTHORIZE CO-OP
INVASION OF CITIES.
The only circumstance under which a co-op could oper-
ate in a city would be where the rural area it had served is
annexed or incorporated. There is nothing to prevent growth
—and the advancement of city limits. There being no ghost
cities in Texas, it is the city which invades the country. As
this happens, an important segment of an electric cooperative
may be brought within the boundary of a city. H. B. 2 (S.
B. 7) would permit the co-op to stay there—subject to the
wish of the city.
3. IT DOES NOT RESTRICT THE CITIES.
Section 4 of H. B. 2 (S. B. 7) expressly states ‘that
nothing in this Act shall be construed to affect the exclu-
sive dominion and control every city, town, and village, how-
ever created, has or may have over its public streets, side-
walks, alleys, parks, public squares and public ways within
its corporate limits; and all electric cooperative corporations
shall comply with all charter or ordinance provisions ap-
plicable to electric and public utilities.’
4. IT DOES NOT VIOLATE THE ORIGINAL
PURPOSE OF R. E. A.
R. E. A. is a federal agency which was set up in 1936 to
loan money to anyone who would use the money for a certain
purpose. That purpose: carry electric system service to
people not having it.
Nobody said in 1936 that the borrower from R. E. A. was
to stay in business only until some other electric system
would serve in the borrower’s stead.
If growth and city annexation were to mean the elim-
ination of the R. E. A. borrower, there would not be much for
the borrower to gain by his borrowing except the satisfaction
of proving to another supplier that the operation was feasible.
And it would be an odd intention of a lender to plan for
his borrower to be restricted as soon as his operation became
feasible and attractive to a competitor.”
To analyze our problem and acquaint the Public with our
predicament we offer the following information:
First, under the present statue Electric Cooperatives in
Texas are prevented from operating in an area, which they
have served for years, after this ara has been annexed by an
incorporated town.
Under the present law Cooperatives are required to re-
move their lines and services out of an annexed area, even
though the town would grant a franchise permitting the co-
operative to continue operating in the area annexed.
Second, Cooperatives do not have equal rights with the
power companies in rural areas which have been served and
developed by the cooperatives over the years. At the present
time the private power companies build lines out into the
rural area served by the Cooperatives and take consumers or
potential consumers of the Cooperatives at will, (this is be-
ing done all the time). Can the Cooperative retaliate and
take consumers from the power companies? The answer is
NO. One can easily understand that a power company could
eventually wreck a cooperative by taking consumers in
densely populated rural areas, leaving only the sparsely set-
tled areas to the Cooperatives.
Under the title of ’‘The R. E. A. in Texas”, the Texas
Power & Light Company recently sent out a brochure to all
Legislators, sister power companies, municipal and business
leaders over the state. This brochure was a propaganda
document of the “first water”. It was filled with propaganda
not consistant with facts, and only presented one side of the
story.
Many erroneous statements about electric cooperatives
were made in this brochure. Due to the lack of space, we can
only call your attention to a few.
T. P. & L. allege, and we quote, “although House Bill 547,
passed by the 55th Texas Legislature in 1957 gave the Coop-
eratives what they originally requested, some Cooperatives
are now asking for the right to expand their services in incor-
porated cities.” Nothing could be farther from the facts.
Cooperatives do want to be permitted to continue to serve
annexed areas which were rural when their lines were built,
PROVIDING THE COOPERATIVE CAN OBTAIN A FRAN-
CHISE COVERING THE AREA SERVED, FROM THE
TOWN BY WHOM THEY WERE ANNEXED. Cooperatives
have no desire to extend their services other than in THAT
AREA THEY WERE SERVING WHEN ANNEXED by the
town. AND THEN ONLY AT THE WILL OF THE GOV-
ERNING BODY OF THE TOWN.
To the average person it may not seem important that a
Cooperative give up an area that they had developed and
served over the years—an area that the private power com-
panies had refused to serve because it was not profitable for
them to do so. But after this area has been developed because
of Cooperative electric power, and annexed by a town, then
it becomes quite attractive to the Power Companies. These
areas are also very necessary to the financial stability of the
cooperatives. For without some thickly populated areas
which the Cooperatives have developed around towns, by
virtue of having their lines in these areas, it would be impos-
sible to serve those way out in the thinner populated parts
of the country.
T. P. & L. also infers that the electric cooperatives pay
little or no taxes. Cooperatives pay all taxes that any power
company pays except a Federal income tax. A cooperative has
no income to tax. For after paying all operating expenses,
interest and principal payments, anything left is credited to
the account of its member-owners as patronage capital.
On the basis of revenue received per mile of line from
the sale of electric energy, the Cooperatives probably pay
twice as much property taxes as the power companies pay.
The cooperatives serve less than three consumers per mile of
line, whereas the power companies serve more than thirty
per mile.
T. P. & L., in stating the amount of taxes Cooperatives
were NOT paying, were very careful not to mention the huge
amount of tax subsidies they and other power companies in
the United States have received and will receive at tax pay-
ers expense.
This will amount to more than 18 billion dollars. And
don’t forget T. P. & L. and C. P. & L. have, and will receive
their share.
The total amount borrowed by all of the electric Coopera-
tives from the Treasury is a little more than four billion dol-
lars, and all of this is being paid back with interest. How
much of the $18 billion tax subsidy received by the power
companies will be returned to the tax payer?
Another statement that T. P. & L. makes, and we heart-
ily concur, we quote, “the existence of two or more utilities
serving the same general area is inherently wasteful.” We
agree, but apparently this opinion is not shared by many of
the power companies in the state. For instance the Central
Power and Light Company has built many miles of lines out
into the rural area served and developed by the Jackson Elec-
tric Cooperative and pirated potential consumers of the Co-
operative. This is going on continually.
It isn’t our policy, neither is it our desire to take issue
with anyone in the Press. But for the past ten or fifteen
years the private power companies have spent untold millions
of dollars of their electric rate payers money, in newspaper,
magazine, radio and television advertising, to “smear” the
electric cooperatives. These ads are unfair and deceptive,
and in our opinion, insult the intelligence of the public. Why
isn’t money for this misleading advertising being used for
paying dividends to the stock holders of the power companies,
or rate reductions for their customers?
The Jackson Electric Cooperative, is a locally owned and
locally controlled Corporation with an annual payroll of more
than $125,000.00. This money, as well as the annual Patron-
age Refund checks paid to members, is spent on main street
in the town of several counties in which it operates.
We realize that this statement has been rather lengthy.
But we only wish to set the “record straight.” Much, much
more could be said in defense of the Cooperative program.
However, space does not permit.
If you are a Member or a friend of this Cooperative and
believe in justice being done, write or call your State Repre-
sentative and Senator and urge them to support and work
for the passage of House Bill 2 and Senate Bill 7.
Respectfully submitted.
JACKSON ELECTRIC COOPERATIVE, INC.
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Dismukes, Jesse V. Palacios Beacon (Palacios, Tex.), Vol. 54, No. 9, Ed. 1 Thursday, March 2, 1961, newspaper, March 2, 1961; Palacios, Texas. (https://texashistory.unt.edu/ark:/67531/metapth710049/m1/7/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Palacios Library.