USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Timothy Lee, Buchalter LLP
Supply Supply (retail electricity sales) is provided by a combi- nation of IOUs, POUs, CCAs and ESPs, depending on local market access and customer eligibility. Principal laws governing the ownership and structure of California’s power industry include the following. • The California Public Utilities Code: (a) Sections 216–218 define electric corporations and public utilities; (b) Section 366.2 enables the formation of CCAs; and (c) Sections 454.51–454.53 require utilities to meet planning and clean energy goals. • Senate Bill (SB) 100 (2018) sets a statewide goal of 100% zero-carbon electricity by 2045. • AB 2514 and AB 2868 support energy storage procurement and pilot programmes. • The Federal Power Act (FPA) grants the Federal Energy Regulatory Commission (FERC) authority over interstate transmission and wholesale electric- ity markets. • The California Environmental Quality Act (CEQA) applies to most major infrastructure projects, requiring environmental review and public input. 1.2 Principal State-Owned or Investor-Owned Entities In California, the principal entities in the power indus- try include IOUs, POUs and CCAs. IOUs and POUs provide retail electric sales and are responsible for the generation, distribution and trans- mission systems located within their respective ser- vice territories. The majority of California’s population is served by the state’s three large IOUs: • Pacific Gas and Electric (PG&E);
The largest POUs in California include the Los Angeles Department of Water and Power (LADWP) and Sacra- mento Municipal Utility District (SMUD); there are cur- rently 37 total POUs operating throughout California. CCAs are local government entities that buy electricity on behalf of customers within the IOUs’ service ter- ritories, while the IOUs remain responsible for power delivery and other customer service functions. There are currently 25 CCAs operating throughout California. 1.3 Foreign Investment Review Process The OBBBA, signed on 4 July 2025, broadened FEOC restrictions across a wider set of clean energy tax credits and formally redefined “prohibited foreign entities” to include both specified foreign entities and foreign-influenced entities. It introduced more strin- gent eligibility rules by prohibiting taxpayers them- selves from being FEOCs and limiting “material assis- tance” (equipment, components, financing, or control) from such entities in qualifying projects. Many of the expanded restrictions generally became effective on 1 January 2026 while others track the tax years following enactment, replacing prior narrower IRA- only applications and extending to multiple credits (eg, 45X, 45Y, 48E). The law also imposes escalating thresholds on allowable foreign involvement, requiring increasing shares of non-FEOC content in projects over time to maintain eligibility. Overall, the impact is a materially tighter regime that increases compliance complexity, restricts access to tax incentives, and accelerates supply chain decou- pling from foreign adversary-linked entities – while potentially dampening or delaying clean energy investment due to stricter qualification requirements and uncertainty. 1.4 Sale of Power Industry Assets There are restrictions regarding the sale of power industry assets or businesses, or for other transac- tions, including mergers in California. In California, any proposed sale, lease, transfer or merger involving IOU-owned electricity assets – including generation, transmission, storage or distribution infrastructure – is subject to California Public Utilities Commission (CPUC) review and approval.
• Southern California Edison (SCE); and • San Diego Gas and Electric (SDG&E).
PG&E’s service territory spans from Santa Barbara to Shasta Counties, SCE’s territory spans from River- side to Mono Counties, and SDG&E serves San Diego County and southern Orange County.
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