Pub. Util. Code, § 1506

(a) As used in this chapter, “private utility” includes a mutual water company. In its application to mutual water companies, this chapter affects and relates only to the property, or portion of any property, of a mutual water company that is employed by the company in providing water service in or for a territory that is actually being provided with water service by the company when a political subdivision constructs facilities to provide or extend water service or provides or extends the service to the territory, and that territory shall constitute the “service area” of a mutual water company as used in Section 1502.

(b) Subject to the preservation of rights of a mutual water company in subdivision (c), this section does not apply to a political subdivision that constructs facilities to provide or extend recycled water service to the territory of the mutual water company, if the political subdivision complies with the Water Recycling Act of 1991 (Chapter 7.5 (commencing with Section 13575) of Division 7 of the Water Code).

(c) The exception in subdivision (b), for a political subdivision that constructs facilities to provide or extend recycled water service to the territory of the mutual water company, does not apply to those customers and their properties to which the mutual water company was providing recycled water service, or for whom the mutual water company has identified and developed specific plans to provide recycled water service, as of December 31, 2014.