California Code, Public Utilities Code - PUC § 16474

Whenever any of the facilities, works, or utilities of all or part of a district is not used or employed to its fullest capacity for the benefit or requirements of the district or its inhabitants, the district may employ such surplus facilities to supply any of its public utility services outside the boundaries of the district upon such terms and conditions and under such agreement as its board determines is for the best interests of the district. Any public utility service supplied by a district outside its boundaries shall not exceed in amount the same type of public utility service supplied by the district within its boundaries.