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Signed Into Law
Signed June 20, 2025Effective 2025-09-01
SB1789

Regular Session

Relating to electric service quality and reliability; providing an administrative penalty.

Government Affairs & Regulatory Compliance Analysis

SB1789: Government Affairs Overview

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.

Sen. Charles Schwertner·Senate Bill·Regular Session

Critical
High Cost
Effective:2025-09-01
Business Impact

Who SB1789 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-09-01). Review with your legal and compliance teams to understand implications.

⚡

Energy

Affected business types:

  • Power generators
  • Electric utilities
  • Renewable energy developers
  • Battery storage operators
View all energy legislation

Key Operational Considerations

  • 1Indemnification: Since the utility faces ROE reduction for pole failures, contracts must shift liability to vendors who fail to identify or remediate compromised assets.
  • 2SLA Alignment: Vendor remediation timelines must strictly mirror the upcoming PUC-mandated "reasonable timeline." "Best efforts" clauses are insufficient.
  • 3Engineering Audit: You likely require additional engineering resources to implement the mandatory pole classification system (assessing age, geography, and load).
  • 4Executive 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.

Estimated Cost Impact

highSignificant operational investment may be required.

Enforcing Agencies

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SB1789
Critical
Relating to electric service quality and reliability; providing an administrative penalty.
Critical Compliance Urgency
Requires immediate attention
Cost Impact
High
Effective
2025-09-01
Enforcing Agencies
PUC
Primary Author: Sen. Charles Schwertner
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

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.
  • 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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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 28, 2025
Passed Senate
Apr 23, 2025
Passed House
May 20, 2025
Signed
Jun 20, 2025
Effective
Sep 1, 2025
TopicsUtilitiesUtilities--electricPublic Utility CommissionDisaster Preparedness & Relief
03

Senate Authors

Sen. Charles SchwertnerRepublican · Primary Author

House Sponsors

Rep. John McQueeneyRepublican · Primary Sponsor
Cosponsors (2)

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Charles Schwertner

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about SB1789

Q

What does Texas SB1789 do?

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.

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 significant are the changes in SB1789?

The regulatory priority for SB1789 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

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.

Q

What are the key dates for SB1789?

Key dates for SB1789: Effective date is 2025-09-01. Rulemaking: Must adopt standards for structural integrity, inspection, and classification of transmission and distribution poles. (TBD (Post-Sept 1, 2025)); Must formally adopt the PUC's standards (or revised standards) for their own operations. (120 days after PUC adopts rules). Consult with legal counsel regarding applicability.

Q

What are the penalties under SB1789?

SB1789 establishes the following penalties: Financial (Rate Case Adjustment) penalty of Reduction in Return on Equity (ROE) for Electric utility fails to comply with pole standards AND system is damaged by weather (Sec. 36.402(b-1)).; Administrative Penalty penalty of Variable under Utilities Code Sec 15.023 for Violation of pole standards or reporting rules by MOUs or Co-ops.; Enforcement Action Trigger penalty of Variable Enforcement Action for Feeder SAIDI or SAIFI exceeds system average by more than 200% (tightened from 300%) over a two-year period.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB1789?

SB1789 primarily affects utility companies and energy providers. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026