Thursday, April 22, 2010

Darren Yancy Tells It Like It Is - calls spade a spade

Texas needs more insurance competition - new forms of energy

How do you cram the facts of a complete reversal of public
policy into a two-minute rebuttal in a candidate's debate?

You don't.

That's why Senate District 22 Candidate Darren Yancy sat
down with us Thursday night to review some of the laws
changed by Kip Averitt when he was a Representative, David
Sibley when he was a State Senator, and George "Dub-yah"
Bush when he was Governor.

His anwswers are straightforward and surprisingly candid.

It's all about something we've all known for many years, but
didn't talk about all that much. Now it's time to make a

The Legendary: Does the action of a lobbyist running for his
old legislative seat represent something as bad as

"He has been representing special intersts...He (Sibley)
spent 10 years in the Senate and 10 years as a
lobbyist...How after 10 years you come back and reconcile
that upsets a whole lot of people."

L - Do the changes the triumvirate of Averitt as a
Representative, Sibley as a Senator and Dub-yah as Governor
made represent a new posture in Texas business?

"It can certainly be argued that a lot of those bills were
not in the best interest of small businesses and consumers."

L - You could come back and do a better job than Mr.
Birdwell and Mr. Sibley because of your background as a
BBA...a venture capital specialist and an insurance and real
estate broker.

"There are a couple of different ways. First off, I have a
vision, and that vision for Texas is economic
dominance...and the way you do economic dominance, you take
the sector that's brought us to the forefront and that's the
energy sector, that's oil and gas, and we've got nuclear,
coal...We could be an exporter to other states. That
economic engine is going to drive other industries,
chemicals, plastics...That will create new sources of
revenue and we can eliminate unnecessary taxes.

L - What are some of the economic stumbling blocks you see?

"The first thing we have to get rid of is SB 14. That's the
law that allows insurance to use credit as a scoring
mechanism for insurance rates. But it's not regulated...In
my opinion, it's just a way to gouge consumers."

L - Insurance carriers, he explained, pull a credit report
on consumers who have to insure autos, homes and titles.
Based on the credit rating, the carriers set the rate of
premiums to be paid.

"I think one of the things we're going to have to tackle and
tackle soon is HB 5. That's the business franchise tax.
It's basically a gross revenue tax. The mistake they made
by passing that on business is they went in and they said,
okay, you pay on your gross to do business here, but it's
taking out a lot of our large industries. You know, J.C.
Penney up in Plano is considering moving out...If we don't
make that change, we're going to lose those industries.

"We've got to lower those taxes; we've got to get that
economic engine going...We've got to cut taxes. We've got to
lower spending."

L - In what areas?

"We can look at consolidating some departments. Combining
the State Board of Education and TEA. We can look at the
Texas Department of Insurance. I can't say the staff we
have at the Department of Insurance is what we need.

"We need to take a look at the Brazos River Authority and
the Trinity River Authority. Are they really spending money

L - Mr. Yancy mentioned that that BRA has drawn several
million in bond funds that have not been spent on the Morris
Sheppard Dam at Possum Kingdom.

"That's an example of mismanagement of a public project."

L - You said that you aren't sure all the numbers are being
crunched properly in the studies that have led to the ($35
billion) State Water Plan. You aren't sure they've been
applied correctly. Can you tell me why you feel that way
about that?

"Yeah, you can look at the Morris Sheppard Dam at Possum
Kingdom Lake. There's a project that hasn't been managed
properly. There's arguments on both sides of the aisle as
to why that's been done. But I think the fact that it got
shut down is a clear example of mismanagement.

"We know that we've got at least $3.8 million that was
allocated but not spent in bond funds. That's not the proper
management of funds.

"There's a specific example of a project that impacts the
flow of water down the Brazos, that impacts the communities
involved. Then there's the way the upper Brazos has been
managed. There's a significant amount of sluice that is
coming from the quarries on the river. I'm not saying I want
the quarrying to stop...I'm saying that those companies
should be cleaning out the sluice that winds up in the
bottom of the lakes...Mr. Averitt, when he chaired the
Natural Resources Committee, I'm sure was aware of it. Why
wasn't he on those companies to have the situation

L - The BRA is defending against a lawsuit filed by Brazos
Electrical Co-Op for breach of contract. The Morris
Sheppard Dam, completed in 1942, supplies 24 megavolts to
the power grid, something the Co-Op pays a half million
dollars per year to buy for remarketing to consumers.
Though the dam and its hydroelectric power station have an
operating permit from the Federal Electrical Regulatory
Commission, the BRA management has chosen to shut down its
electrical power generators because they do not consider
them cost effective.

L - The outlook on insurance here in Texas. Obviously, it's
got a large impact on the national economy...What can you do
to straighten the situation out and make it better?

"There has been a lot of improvement over the past few years
with the allowance of the Department of Insurance for
companies in Texas to use their own forms (of customized
policies). We had a serious stand-off back in the early
years of the decade over black mold and it almost caused a
number of companies to pack their bags and leave the state.
Jose Montemayor, who was insurance commissioner at that
time, allowed companies to come in and compete. So now what
you have in Texas is a number of new companies that have
improved the competitive outlook.

"What we have in Texas is that we're a catastrophe state
what with wind damage, hail damage and hurricanes...It
drives a lot of our property rates up. Hurricane Ike that
came through a couple of years ago, it cost over a billion
dollars. That's gonna flow up through the rate system...And
there's nothing you can do other than to continue to bring
more companies in."

L - On electrical regulation, what's your take on the Enron
debacle, the shake-up. Really, it's a very complicated
thing; it's impossible to explain in a two-minute rebuttal
in a candidate forum. But what could you do as a state

"Enron was an unexpected and certainly unpredicted and
unforeseen consequence of what energy brokerage could be
done in Texas. I don't think anybody intended that to

"We need to continue to diversify our energy profile. We
know that Waco is bringing in coal-fired plants. Glen Rose
is about to build two new nuclear plants, and they're the
new and smaller-sized plants. We need to continue to exploit
the one thing we have plenty of, and that's natural gas.
But we need to continue to develop wind and water-powered
forms of electrical generation.

"That was the thing that I couldn't get over with the Morris
Sheppard Dam at Possum Kingdom. Here you have a clean form
of energy and you go and shut it down? It doesn't make

"You have to continue to bring in alternative energy
companies that have new technologies and get them to market

"I represent a company now that has a proprietary biofuel
program. We need to look at that. Agricultural land that is
not as profitable as it should be could be supplemented with
wind farms that return marketable electrical power to the
power grid."

L - Is there a way to slow down the increases in insurance
rates? We have a State Farm come in and ask for an 8.8
percent increase in July, then ask for an additional 4
percent after the first of the year due to reinsurance
costs. Losses due to bad investments in life insurance,
property and casualty plans are allowed to be passed on to
rate payers. What do you do?

"The danger is in the fact that it's a balancing act. Let's
say State Farm says we lost this much so we need 8 percent
to offset that. The board says we think 4 percent is more
like it. The only way to remedy that is to continue to
bring in new competition. If they pack up and leave, you
have a deficiency and you wind up like Florida...

"We are seriously on the verge of becoming a self-insured

"In Florida, because they are a hurricane-prone state, they
wound up taxing and controlling the profitability of
carriers. Allstate pulled out. State Farm pulled out. What
they have done is they have created a state company and
that state company writes a majority of the coverage in

"And here's the problem. The first time a catastophe comes
along and creates a shortfall, every auto, home and property
policy is assessed a penalty to make up the losses."

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