Page 29


they agreed that line-of-credit lending offered borrowers more options, public interest groups argued that lawmakers should first deal with the lending market’s current problems. Consumer advocates feared that without further safeguards for the public, an expansion of home equity lending would cause an explosion in predatory lending to vulnerable homeowners, exposing more Texans to crushing debt. Consumers Union and AARP backed another constitutional that would have implemented a series of consumer protections aimed at scuttling predatory lending practices. Lenders such as Compass Bank lined up against SJR 52, and, consumer groups say, killed it. The amendment never even earned a hearing in the Senate Business and Commerce Committee extraordinary given that most constitutional amendments at least get committee hearings. Even the proposed amendment to place a moratorium on the death penaltya bill that was lifeless the second it was printedwas heard in committee. Last session, it was clear who had sway in the 78th Legislature. Compass Bank and other lenders won the new loan market they craved. Meanwhile, as Consumers Union’s Rob Schneider put it, the Lege “didn’t address the [lending] problems that are sinking little old ladies.” R fight before they visited McMahen that Monday, Woolley and Lilly had met Bruce Gibson in his office on the 47th floor of the Reliant Energy tower in downtown Houston. Gibson served in the Texas House in the 1980s, before settling into life as a well-paid lobbyist for Reliant. After the 2002 election, he would become chief of staff for Lieutenant Governor David Dewhurst. Soon after the meeting, Reliant contributed $25,000 in corporate funds to TRMPAC, according to federal campaign records. That donation was part of $600,000 in corporate cash that TRMPAC raised and spent, possibly illegally, on campaign activities. How TRMPAC used and acquired those funds is at the heart of Travis County District Attorney Ronnie Earle’s ongoing investigation into TRMPAC, Speaker Craddick, and TAB [see “Scandal in the Speaker’s Office,” February 27, 2004]. Included in TRMPAC’s $600,000 soft-money corporate haul is a $50,000 contribution from another energy giant, El Paso Energy. Gibson says he remembers the meeting, but can’t recall what was discussed. He said he clung to a strict policy of never discussing legislation and campaign contributions together. “It’s always been a bright line for me,” he says. Unlike the entries on the Houston itinerary memo for every other meeting Woolley and Lilly held that day, there are no legislative suggestions written next to Gibson’s name. Nevertheless, Reliant and El Paso Energy seem to have done quite well from the 78th Legislature. Around the time of Gibson’s September 2002 meeting with Woolley and Lilly, Reliant Energy was splitting its operations. As required by the state’s laws that had already deregulated the electricity market, Reliant separated its production and electricity line divisions from its electricity provider. The production sections were named CenterPoint Energy. Reliant Resources became the company the sells electricity to most homes in Houston. Despite the split, however, industry observers say the two outfits are still closely tied. Both companies had a stake in the 2003 session. In past legislative sessions, bills concerning energy and telecommunications regulation were the domain of the House State Affairs Committee. But after Craddick became speaker, he created a Regulated Industries Committee specifically to handle such bills. Hard-line Weatherford Republican Phil King, one of Craddick’s chief lieutenants, chaired the committee. King’s panel mostly served as a bottleneck for legislation. Many a pro-consumer bill withered in the committee during the 2003 session. In contrast, a handful of specially selected industry bills passed quite quickly. One of those was House Bill 1942 \(it later passed as Senate outfits to charge customers more on their gas bills, at the discretion of city governments, to compensate gas corporations for capital improvements such as repairs or construction to pipelines that perk up service. The rub is that although the legislation was sold as a way for companies to recoup money spent on pipeline and infrastructure improvements, the bill doesn’t limit what expenses gas companies can foist on to consumers. Geoffrey Gay, an Austin attorney who represents several municipalities around the state before the Lege, opposed the bill. He notes that under the new law, a gas company could buy a Lear jet or refurnish a boardroom and attempt to recover those outlays from customers. Gay believes the bill will be a windfall for industry since companies will avoid frequent costly and heated rate cases before the Railroad Commission. He predicts that many cities won’t deny companies’ rate hike proposals, and believes consumers will pay the price. The bill flew through the Regulated Industries Committee with astonishing swiftness. The Senate passed its version on April 25, 2003. King’s committee received, heard, and passed the bill within five days. Two weeks later, it had passed the full House. “It was clear from the moment I started working on it that they had the votes. The companies had the lobbyists all lined up,” says Gay, who watched eight consumer bills he backed die in King’s committee and a ninth rot in Woolley’s Calendars Committee. “They had all the wheels greased.” Some companies have already moved to take advantage of the new law. One is the former Reliant division, CenterPoint Energy, which, along with its electricity business, operates two interstate natural gas pipelines. It should also be noted that El Paso Energy, a TRMPAC contributor, also has significant pipeline holdings. Beyond the pipeline bill, Reliant Resources, the electricity provider in Houston, likely benefited from the death of at least six pro-consumer electricity bills that never emerged from King’s Regulated Industries Committee. The bills, filed by Houston Democrat Sylvester Turner, dealt with every -continued on page 18 3/12/04 THE TEXAS OBSERVER 7