You seem to have misread the sentence. Having a municipality that runs a utility is not at all related to how a US state could seize the assets of a private company, fire the Board of Directors and steal the ownership shares from all of its investors (large or small) in order to make it a state run enterprise.

So no, that's not how.

I did misinterpret the point of issue.

However, lets say that California couldn't seize PG&Es assets directly (transmission lines, etc.) - that doesn't really matter as California can force PG&E's hand, given that they could easily put them out of business.

California is in control, it just doesn't have the political capital to do what's needed.