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(2) negotiable certificates of deposit issued by a bank that has a certificate of deposit rating of at least
<br />1 or the equivalent by a nationally recognized credit rating agency or that is associated with a holding company having a
<br />commercial paper rating of at least A-l, P-l, or the equivalent by a nationally recognized credit rating agency; and
<br />(3) corporate bonds, debentures, or similar debt obligations rated by a nationally recognized
<br />investment rating firm in one of the two highest long-term rating categories, without regard to gradations within those
<br />categories.
<br />Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
<br />Sec. 2256.0201. AUTHORIZED INVESTMENTS: MUNICIPAL UTILITY. (a) A municipality that owns a
<br />municipal electric utility that is engaged in the distribution and sale of electric energy or natural gas to the public may
<br />enter into a hedging contract and related security and insurance agreements in relation to fuel oil, natural gas, and electric
<br />energy to protect against loss due to price fluctuations. A hedging transaction must comply with the regulations of the
<br />Commodity Futures Trading Commission and the Securities and Exchange Commission. If there is a conflict between the
<br />municipal charter of the municipality and this chapter, this chapter prevails.
<br />(b) A payment by a municipally owned electric or gas utility under a hedging contract or related agreement in
<br />relation to fuel supplies or fuel reserves is a fuel expense, and the utility may credit any amounts it receives under the
<br />contract or agreement against fuel expenses.
<br />(c) The governing body of a municipally owned electric or gas utility or the body vested with power to manage
<br />and operate the municipally owned electric or gas utility may set policy regarding hedging transactions.
<br />(d) In this section, "hedging" means the buying and selling of fuel oil, natural gas, and electric energy futures or
<br />options or similar contracts on those commodity futures as a protection against loss due to price fluctuation.
<br />Added by Acts 1999, 76th Leg., ch. 405, Sec. 48, eff. Sept. 1,1999.
<br />Sec. 2256.0205. AUTHORIZED INVESTMENTS; DECOMMISSIONING TRUST. (a) In this section:
<br />(1) "Decommissioning trust" means a trust created to provide the Nuclear Regulatory Commission
<br />assurance that funds will be available for decommissioning purposes as required under 10 C.F.R. Part 50 or other similar
<br />regulation.
<br />(2) "Funds" includes any money held in a decommissioning trust regardless of whether the money is
<br />considered to be public funds under this subchapter.
<br />(b) In addition to other investments authorized under this subchapter, a municipality that owns a municipal
<br />electric utility that is engaged in the distribution and sale of electric energy or natural gas to the public may invest funds
<br />held in a decommissioning trust in any investment authorized by Subtitle B, Title 9, Property Code.
<br />Added by Acts 2005, 79th Leg., ch.121, Sec. 1, eff. Sept. 1, 2005.
<br />Sec. 2256.021. EFFECT OF LOSS OF REQUIRED RATING. An investment that requires a minimum rating
<br />under this subchapter does not qualify as an authorized investment during the period the investment does not have the
<br />minimum rating. An entity shall take all prudent measures that are consistent with its investment policy to liquidate an
<br />investment that does not have the minimum rating.
<br />Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
<br />Sec. 2256.022. EXPANSION OF INVESTMENT AUTHORITY. Expansion of investment authority granted
<br />by this chapter shall require a risk assessment by the state auditor or performed at the direction of the state auditor,
<br />subject to the legislative audit committee's approval of including the review in the audit plan under Section 321.013.
<br />Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1,1995. Amended by Acts 2003, 78th Leg., ch. 785, Sec. 42,
<br />eff. Sept. 1, 2003.
<br />Sec. 2256.023. INTERNAL MANAGEMENT REPORTS. (a) Not less than quarterly, the investment officer
<br />shall prepare and submit to the governing body of the entity a written report of investment transactions for all funds
<br />covered by this chapter for the preceding reporting period.
<br />(b) The report must:
<br />(1) describe in detail the investment position of the entity on the date of the report;
<br />City of San Marcos Investment Policy Page 29
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