California Code, Water Code - WAT § 80116

The department may sell any power acquired by the department pursuant to this division to retail end use customers, and to local publicly owned electric utilities, at not more than the department's acquisition costs, including transmission, scheduling, and other related costs, plus other costs as provided in Section 80200, or exchange power with any person or public or private entity.  The department may not sell power to any local publicly owned electric utility, as defined in Section 9604 of the Public Utilities Code, which is itself a net seller of power.  However, to the extent that any acquired power is not required for use within the state, if it is otherwise advantageous and necessary, the power may be sold, transferred, or otherwise disposed of, or an option may be granted with respect to the power, to any person or public or private entity.  Except to maintain system integrity, the department shall sell the power that is to be delivered to retail end use customers within the service area of the electrical corporations that purchase power from the electrical corporations directly to the retail end use customers.