Cal. Pub. Util. Code § 6458
The legislative or governing body may in the resettlement franchise provide that in case of consolidation or annexation to the city or city and county of any territory after the date the resettlement franchise is granted, any franchise to operate the street, suburban, or interurban railroad, or any part thereof, held or claimed by the holder of the resettlement franchise in or for any portion of the consolidated or annexed territory shall thereupon be surrendered to the city or city and county, and that the rights and obligations of the resettlement franchise shall thereupon automatically extend to the additional territory, and that a valuation for the purpose of public acquisition of the properties used and useful, or, in the discretion of the city or city and county, prospectively useful, in the operation of the street, suburban, or interurban railroad in the area consolidated or annexed, and not included in the capital valuation already fixed in the resettlement franchise, shall be added to the capital account of the resettlement franchise grantee at a valuation for the purpose of public acquisition fixed by the Public Utilities Commission, and otherwise determined as provided in this chapter.
Ca. Pub. Util. Code § 6458