Pole Standards (MOUs/Co-ops): Must formally adopt standards within 120 days after the PUC finalizes its rules.
First Reporting Deadline: May 1 following the internal adoption of standards.
Agency Rulemaking: The PUC is required to draft and adopt rules defining structural integrity, inspection, and classification standards after the effective date. Expect a "regulatory gray zone" between Sept 2025 and final rule adoption; utilities must participate in this process to influence the definitions of "weather-related events."
Immediate Action Plan
Run Feeder Analysis: Immediately stress-test your current feeder SAIDI/SAIFI data against the new 200% threshold to identify at-risk assets before the law takes effect.
Inventory & Classify: Begin the pole classification process now based on current NESC standards; do not wait for the PUC rules to start your inventory.
Review D&O Insurance: Confirm that Directors & Officers liability policies cover regulatory non-compliance allegations related to the new officer attestations.
Update Vendor MSAs: Renegotiate inspection contracts to include strict indemnity clauses tied to the new regulatory penalties.
Operational Changes Required
Contracts
Master Service Agreements (MSAs) with vegetation management and pole inspection vendors must be amended immediately.
Indemnification: Since the utility faces ROE reduction for pole failures, contracts must shift liability to vendors who fail to identify or remediate compromised assets.
SLA Alignment: Vendor remediation timelines must strictly mirror the upcoming PUC-mandated "reasonable timeline." "Best efforts" clauses are insufficient.
Hiring/Training
Engineering Audit: You likely require additional engineering resources to implement the mandatory pole classification system (assessing age, geography, and load).
Executive Liability: The C-Suite (specifically the highest-ranking officer) requires briefing on personal and corporate liability, as they must sign a binding attestation of compliance.
Reporting & Record-Keeping
New Annual Filing: A report detailing inspection counts, maintenance schedules, and remediation is due annually by May 1.
Evidence of Maintenance: To defend against the new 200% enforcement threshold, you must maintain granular logs of "operating and maintenance history" for every feeder. Absence of records will be construed as negligence.
Fees & Costs
Financial Penalty: The primary cost risk is the Reduction in Return on Equity (ROE) for IOUs and administrative penalties for MOUs/Co-ops.
CapEx Increases: Expect significant capital expenditure requirements to replace poles that do not meet the new, yet-to-be-defined structural standards.
Legal/Compliance: The PUC has been funded to hire additional attorneys and investigators specifically to pursue these fines; your legal defense budget should reflect this increased scrutiny.
Strategic Ambiguities & Considerations
The legislation leaves critical definitions to PUC rulemaking. Your legal team must actively monitor and comment on:
"Weather-Related Event": The definition must be narrowed to exclude Force Majeure events (e.g., EF-5 tornadoes) where no pole could survive, to prevent unjust ROE reductions.
ROE Penalty Calculation: The statute does not cap the ROE reduction amount. Rulemaking must establish a predictable penalty matrix.
Standard Specificity: It is unclear if the PUC will adopt the National Electrical Safety Code (NESC) as-is or impose stricter "Texas-specific" hardening, which would drastically alter compliance costs.
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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
Regular inspection and maintenance of the poles and wires that support Texas' vast transmission and distribution system is essential to ensuring overall grid resiliency. Identifying and addressing vulnerabilities early can help mitigate damage from severe weather events, and more importantly, helps protect Texas homes and businesses.
However, Texas currently lacks basic standards for pole inspections, repairs, reinforcements, or replacements. S.B. 1789 addresses this gap by authorizing the Public Utility Commission of Texas (PUC) to establish standards for the structural integrity of transmission and distribution poles. The bill requires electric utilities to report annually on pole maintenance and repair efforts. Finally, S.B. 1789 allows the PUC to take action when a utility fails to adequately address degraded infrastructure.
As proposed, S.B. 1789 amends current law relating to electric service quality and reliability.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the Public Utility Commission of Texas in SECTION 3 (Section 38.006, Utilities Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 36.402, Utilities Code, by adding Subsection (b-1), as follows:
(b-1) Prohibits the Public Utility Commission of Texas (PUC), notwithstanding Subsection (b) (relating to requiring that system restoration costs include carrying costs at the weighted average cost of capital as last approved by the PUC in a general rate according to a certain timeline) from authorizing an electric utility to receive a return on equity for repaired or replaced damaged infrastructure that the PUC determines the utility should have reasonably anticipated could have been damaged by the weather-related event or natural disaster.
SECTION 2. Amends Section 38.005(b), Utilities Code, as follows:
(b) Authorizes the PUC to take appropriate enforcement action under Section 38.005 (Electric Service Reliability Measures), including action against a utility, if any of the utility's feeders with 10 or more customers has had a SAIDI or SAIFI average that is more than 200, rather than 300, percent greater than the system average of all feeders during any two-year period, rather than any two-year period beginning in the year 2000. Requires the PUC, in determining the appropriate enforcement action, to consider certain factors, including the duration of each interruption in the feeder's service.
SECTION 3. Amends Subchapter A, Chapter 38, Utilities Code, by adding Section 38.006, as follows:
Sec. 38.006. STRUCTURAL INTEGRITY STANDARDS FOR TRANSMISSION AND DISTRIBUTION POLES. (a) Provides that this section applies only to an electric utility, municipally owned utility, or electric cooperative that operates transmission or distribution assets.
(b) Requires the PUC by rule to adopt standards for the structural integrity of transmission and distribution poles.
(c) Requires that the standards adopted under this section:
(1) require an electric utility, municipally owned utility, or electric cooperative to inspect transmission and distribution poles and take appropriate remedial action as necessary on a timeline established by the PUC;
(2) account for geographic differences between regions of the state;
(3) consider national guidelines such as the National Electrical Safety Code and guidelines developed by the Rural Utilities Service of the United States Department of Agriculture; and
(4) establish a classification system to assess the serviceability of transmission and distribution poles.
(d) Requires each electric utility, municipally owned utility, and electric cooperative to submit to the PUC an annual report on the implementation of the utility's or cooperative's transmission and distribution pole maintenance schedule, the results of the utility's or cooperative's inspection of transmission and distribution poles, including any remediation or replacement action taken, and any other information the PUC requires.
SECTION 4. Amends the heading to Subchapter E, Chapter 38, Utilities Code, to read as follows:
SUBCHAPTER E. INFRASTRUCTURE IMPROVEMENT AND MAINTENANCE
SECTION 5. Amends Section 38.101(a), Utilities Code, to delete existing text requiring each electric utility, not later than May 1 of each year, to submit to the PUC a report describing the utility's activities related to distribution poles and to make nonsubstantive changes.
SECTION 6. (a) Makes application of Section 38.005, Utilities Code, as amended by this Act, prospective.
(b) Requires the PUC, in adopting rules under Section 38.006, Utilities Code, as added by this Act, to allow an electric utility, electric cooperative, or municipally owned utility to complete any required inspection, remediation, or replacement of transmission and distribution poles installed before the effective date of the rules according to a reasonable timeline approved by the PUC that allows the utility or cooperative to prioritize high-risk transmission and distribution poles.
Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB1789 by Schwertner (Relating to electric service quality and reliability.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1789, As Introduced: a negative impact of ($1,815,310) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($907,655)
2027
($907,655)
2028
($907,655)
2029
($907,655)
2030
($907,655)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2025
2026
($907,655)
4.5
2027
($907,655)
4.5
2028
($907,655)
4.5
2029
($907,655)
4.5
2030
($907,655)
4.5
Fiscal Analysis
This bill would amend the Utilities Code to require the Public Utility Commission of Texas (PUC) to establish structural integrity standards for transmission and distribution poles that apply to electric utilities, electric cooperatives, and municipally owned utilities. The standards must require pole inspections, establish a classification system, and consider national guidelines and geographical differences. Each entity must submit annual reports of their pole maintenance schedule and inspection results to PUC.
The bill would modify the System Average Interruption Duration Index (SAIDI)/ System Average Interruption Frequency Index (SAIFI) threshold value for utilities' feeders and directs PUC to consider the duration of each interruption in the feeder's service in taking service quality enforcement action.
The bill would take effect on September 1, 2025.
Methodology
Based on the analysis of the PUC, this estimate assumes the agency would require 4.5 additional full time equivalents (FTE) positions to implement the provisions of the bill.
An Attorney III ($115,500 per year with estimated benefits of $32,825) would be needed for initial and ongoing rule making and updating.
An additional 1.5 Engineers III-IV ($115,500 per year with estimated benefits of $32,825) would be needed to provide subject-matter expertise in the rulemaking process, to participate in the process to bring on a contractor to assist with the annual reviews, to monitor and provide oversight to the contractor, and to inventory issues and questions discovered during the report reviews.
Lastly, an additional Attorney III ($115,500 per year with estimated benefits of $32,825) and an Investigator IV-VI ($90,000 per year with estimated benefits of $25,578) would be needed for increased enforcement responsibilities with more fines being assessed against utilities, and to ensure utilities' adherence to the standards laid out by rule. Other associated costs include $10,789 per year for payroll contributions, travel, and other operating expenses.
According to the PUC, the agency would need an additional $250,000 per year for a contractor to review an estimated 165 annual reports.
Technology
PUC anticipates information technology expenditures of $12,150 per year.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
473 Public Utility Commission of Texas
LBB Staff:
JMc, RStu, GDZ, JBel
Related Legislation
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SB1789 fundamentally shifts regulatory oversight from passive reporting to active financial penalization, authorizing the Public Utility Commission (PUC) to reduce an electric utility’s Return on Equity (ROE) if infrastructure fails standards during weather events. The law significantly tightens the threshold for reliability enforcement actions (lowering the trigger from 300% to 200% above system average) and mandates strict structural integrity standards for all Investor-Owned Utilities, Municipally Owned Utilities (MOUs), and Electric Cooperatives. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: - Feeder Reliability: Immediate internal audit required; enforcement actions initiated on/after Sept 1, 2025, utilize the stricter 200% threshold.
Q
Who authored SB1789?
SB1789 was authored by Texas Senator Charles Schwertner during the Regular Session.
Q
When was SB1789 signed into law?
SB1789 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce SB1789?
SB1789 is enforced by Public Utility Commission of Texas (PUC).
Q
How urgent is compliance with SB1789?
The compliance urgency for SB1789 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB1789?
The cost impact of SB1789 is estimated as "high". This may vary based on industry and implementation requirements.
Q
What topics does SB1789 address?
SB1789 addresses topics including utilities, utilities--electric, public utility commission and disaster preparedness & relief.
Legislative data provided by LegiScanLast updated: November 25, 2025
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