HOUSTON LIGHTING & POWER COMPANY, Petitioner, v. Carol Ann Hauser REYNOLDS, Individually and as Natural Mother of Carl David Reynolds and Carl David Reynolds, Individually, Respondents, 765 S.W.2d 784

COOK, Justice. Sixteen year old Carl David Reynolds was in a friend’s backyard taking down a tent. He coupled eight 3-foot aluminum tent poles together in order to touch a powerline 26 feet and 9 inches above the ground. The poweriine ran across an easement on his friend’s backyard and carried 35,000 volts of electricity. Carl contacted the powerline after being warned by his friend that he might get shocked. The resulting injuries necessitated the amputation of both legs and one arm.

Reynolds sued Houston Lighting and Power, the owner of the powerline; Home-craft Land Development, the subdivision developers; Chicago Tents, the tent manufacturer; Vernon A. Henry and Associates, land planner; Putney, Moffat and Easley, subdivision engineers; and U.S. Home, the home builder. Before trial, Reynolds settled with U.S. Home and Homecraft Land Development for $700,000 plus a guarantee of an additional $1,300,000 if Reynolds did not receive that sum from the other defendants. All remaining defendants other than HL & P were non-suited.

The jury found against HL & P on the basis of strict liability pursuant to RESTATEMENT (SECOND) OF TORTS § 402A (1965) (“Section 402A”) and conscious disregard of the welfare of Reynolds. The trial court rendered judgment on the jury verdict for $2,731,847.49 actual damages and $1,000,000 punitive damages. The court of appeals affirmed the judgment of the trial court. 712 S.W.2d 761. The dispositive issues are: (1) whether electricity in a transmission line, prior to being transformed into voltage usable by a consumer, is a product; and (2) is such electricity in the stream of commerce. We adopted

Section 402A in our opinion in McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787, 789 (Tex.1967). In order to recover for an injury on the theory of strict liability in tort, the plaintiff bears the burden of proving that the defendant: (1) placed in the stream of commerce a product; (2) that such product was in a defective or unreasonably dangerous condition; and (3) that there was a causal connection between such condition and the plaintiffs injuries or damages. Armstrong Rubber Co. v. Urquidez, 570 S.W.2d 374, 376 (Tex.1978).

The question of whether electricity in this case was a product is an issue of first impression for this court. Two Texas courts of appeals have addressed the question and reached conflicting results. In Erwin v. Guadalupe Valley Elec. Co-op., 505 S.W.2d 353, 355-56 (Tex.Civ.App. — San Antonio 1974, writ ref’d n.r.e.), the court assumed without discussion that electricity was a product. In Navarro County Elec. Co-op., Inc. v. Prince, 640 S.W.2d 398, 400 (Tex.App. — Waco 1982, no writ), the court held that electricity was not a product, rather, it was a service.

We agree with the better reasoned opinions of other jurisdictions which hold electricity to be a product. Electricity is a commodity, which, like other goods, can be manufactured, transported and sold. Pierce v. Pacific Gas & Elec. Co., 166 Cal.App.3d 68, 81, 212 Cal.Rptr. 283, 290 (1985). Electricity is a form of energy that can be made or produced by man, confined, controlled, transmitted and distributed to be used as an energy source for heat, power and light. Ransome v. Wisconsin Elec. Power Co., 87 Wis.2d 605, 610, 275 N.W.2d 641, 643 (1979).

Was the electricity which injured Carl Reynolds in the stream of commerce? The transmission line carried 35,000 volts of electricity. To be usable by a consumer the electricity had to be reduced by a transformer from 35,000 volts to 110-220 volts. Until the process was completed, the electricity was not transferred from HL & P’s transmission line through a meter to the lines of a customer. There is evidence that HL & P produced all of its electricity in response to anticipated demand. Further, once the electricity was placed in a transmission line it could not be recalled.

However, this is not evidence that the electricity was delivered to any customer prior to transformation into a usable voltage. Strict product liability applies only if a product is expected to and does reach the user without substantial change in the condition in which it is sold. Rourke v. Garza, 530 S.W.2d 794, 798 (Tex.1975). Following this reasoning, even if HL & P could be considered to have sold the electricity when it was placed in the transmission lines, it would not reach the consumer in that same condition.

The courts of our sister states are not in agreement as to whether electricity is a product or a service, but they are all in agreement that contact with a high voltage transmission line does not come within the purview of

Section 402A. We have found no case, other than the court of appeals’ opinion in this case, which has so held. See United Pac. Ins. Co. v. Southern Cal. Edison Co., 163 Cal.App.3d 700, 705, 209 Cal.Rptr. 819, 821 (1985); Smith v. Home Light & Power Co., 734 P.2d 1051, 1085 (Colo.1987); Genaust v. Illinois Power Co., 62 Ill.2d 456, 464-65, 343 N.E.2d 465, 470 (1976); Hedges v. Public Serv. Co., 396 N.E.2d 933, 935 (Ind.App.1979); Petroski v. Northern Ind. Pub. Serv. Co., 171 Ind.App. 14, 30-31, 354 N.E.2d 736, 747 (1976); Williams v. Detroit Edison Co., 63 Mich.App. 559, 568, 234 N.W.2d 702, 707 (1975); Wood v.

Public Serv. Co., 114 N.H. 182, 188-89, 317 A.2d 576, 579 (1974); Aversa v. Public Serv. Elec. & Gas Co., 186 N.J.Super. 130, 134-35, 451 A.2d 976, 979 (1982); Farina v. Niagara Mohawk Power Corp., 81 A.D.2d 700, 700, 438 N.Y.S.2d 645, 647 (1981); Kemp v. Wisconsin Elec. Power Co., 44 Wis.2d 571, 583, 172 N.W.2d 161, 166 (1969). A utility may be negligent in transmitting its unfinished product to a consumer’s meter. The jury found HL & P to have been negligent only in failing to warn of the danger of contacting the powerline. The court of appeals held that there was no evidence to support that finding. We agree.

An electric company’s duty to warn of contact with electrical lines arises when it: (1) has failed to comply with applicable codes or ordinances governing the placement of lines; or (2) has reason to anticipate that the lines would be dangerous to the plaintiff. Since the powerline was ten feet higher than required by the National Electrical Safety Code, Reynolds had to prove some independent reason for the utility to have anticipated that the lines would be dangerous to him. Houston Lighting & Power Co. v. Brooks, 161 Tex. 32, 336 S.W.2d 603, 608 (1960).

Reynolds has failed to establish any facts, other than the existence of the powerline, giving rise to a duty to warn on the part of HL & P. The judgments of the court of appeals and the trial court are reversed and judgment is rendered that Reynolds take nothing against Houston Lighting & Power Company. TOM LUCE, C.J., sitting by special appointment, as PHILLIPS, C.J., is not sitting. KILGARLIN, J., files a dissenting opinion in which RAY, ROBERTSON and MAUZY, JJ., join.