Was This Allowed At One Point?

Most likely, but the bending radius is not. It was never intended for that size of conductor to be installed. IMO.
It does seem like the conductors are a bit oversized for some reason. Was thinking that perhaps there was a cost effective and code compliant fix without replacing the equipment.
 
It was an old 200A panel. Should have been able to handle the 250’s, but it looked a little tight.

Its a grey area for me on how much I will decline to work on something if there is a visible, but unrelated, issue. I’ve told many potential customers that I will not perform X project unless they are willing to fix Y. But some things that are obviously not as they should be, but have been in place for years, sometimes decades, I may inform them of the issue and let them decide what to do.

I declined a generator install the other day because there had been some issues with the placement of it while the home was being built, the owner had pulled it off the plans, and now wanted it installed. The owner wanted it right under two operable windows and 18” from a a series of flood vents that went directly into the garage. And set on top of free standing concrete blocks. 😳

I told them if they ever wanted to explore other locations, give me a call.

As an aside, it was a brand new build, with solar, battery, and potentially a generator, and whoever the electrician was who wired it to begin with didn’t perform any prep for it, now there’s brand new concrete everywhere, and the owner doesn’t want to saw cut the SonOfAGun out of his brand new driveway. Kind of a bum deal all around. I understand the owners position, the county is almost worse than PG&E to deal with, but I’m not going to do something I can’t stand behind.
 
Bathrooms however….🙄 I regularly tear out out perfectly functional, very nice bathrooms, just to put a fancier one into its place
A friend of mine, prior to selling his million dollar house completely redid the high end kitchen. About a month after the sale, he drives by the house and sees a dumpster with everything from the kitchen in it.

-Hal
 
Rule #1 of building in California. Never, ever make proper preparations for the generator. Always make the generator contractor retrofit it in, even on a new build. Be certain to spread heavy, non-essential loads among all the subpanels. Etc.
Rule #2: prepare for battery backup the same way as for a generator.
 
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