Cal. Wat. Code § 31149.2
The hydroelectric power plant or plants and transmission lines constructed pursuant to this article may be leased for operation by, or the power generated may be sold to, a public utility or public agency engaged in the distribution, use, or sale of electricity. The power generated may be used by a district for its own purposes, or for the production or transmission of water, but shall not be offered for sale directly by a district to customers other than such a public utility or public agency. The power to acquire works and facilities shall not include, and nothing in this article shall be interpreted to allow, the acquisition of property already employed in the generation of hydroelectric energy for public utility purposes, except by mutual agreement between the district and the owner of that property.
Ca. Water Code § 31149.2