Are you saying electric resistance water heaters (storage type) are not allowed for new construction in California?
If the home is all electric or doesn't have access to natural gas then I could see why you wouldn't want to go with LPG or the extra expense of monthly service charges for gas. On the other hand I can understand why California would be trying to minimize electric use/maximizing efficiency after being raped by Enron and associates.
Propane is far more than electric, typically, with all its associated unpleasant plumbing and dangers. I have an old seasonal rate schedule that averages out about 8 cents per KW. Probably lowest on earth. And now we have the care program for lower incomes, quite high numbers actually, and that max's out at 10 cents.
PGE gets a higher proportion of power from old mega hydro schemes than most in the nation.