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This paper discusses the structure of the electricity utility industry in California, United States. The State continues to regulate vertically integrated utilities that have reconstructed and regulates only the portion of the utility that distributes the electricity. Therefore in restructured states, generation and transmission entities are no longer regulated. Depending on the deregulated State, the distribution entity may or may not be a provider of electricity. In the deregulated power system environment, a complete and effective plan is needed to meet the challenges of a new energy market.