Pasadena City Council
June 3, 2024

357232.1

CITY OF PASADENA
Water Financial Plan &
Rate Study
FINAL DRAFT REPORT / MAY 15, 202 4
Attachment A
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May 15, 2024

Elena Chamorro
Principal Financial/Rate Analyst
City of Pasadena
100 N. Garfield Ave.,
Pasadena, CA 91101

Subject: Water Financial Plan & Rate Study Report

Dear Ms. Chamorro,

Raftelis is pleased to present this Water Financial Plan & Rate Study Report. The rate study involved a comprehensive review of Pasadena Water and Power’s financial plan, an assessment of and presentation to the Municipal Services Committee of alternative tiered rate structures (including budget-based tiered rates), and an allocation of costs to customer classes and tiers using Cost of Service principles. The report provides a brief Executive Summary followed by a detailed discussion regarding study assumptions and an in-depth rate derivation.

It was a pleasure working with you and we wish to express our thanks for the support from you and your staff. If you have any questions, please call me at 213 262 9308.

Sincerely,

Steve Gagnon Sarah Wingfield
Vice President, PE Associate Consultant
Project Manager

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Contents

1. Executive Summary ..................................................................... 9

1.1. Background ...................................................................................................................9

1.2. Methodology ..................................................................................................................9

1.3. Results and Recommendations ...................................................................................9

1.3.1. FACTORS AFFECTING REVENUE ADJUSTMENTS ................................................... 10

1.4. Current Water Rates ................................................................................................... 10

1.4.1. MONTHLY FIXED CHARGES ....................................................................................... 11

1.4.2. VARIABLE RATE AND CAPITAL IMPROVEMENT CHARGE ....................................... 12

1.4.3. PRIVATE FIRE SERVICE CHARGES ........................................................................... 13

1.5. Proposed Water Rates ................................................................................................ 14

1.5.1. FIXED CHARGE ........................................................................................................... 14

1.5.2. VARIABLE RATE .......................................................................................................... 14

1.5.3. SURROUNDING AGENCY BILL SURVEY ................................................................... 15

2. Water Enterprise Financial Plan ................................................ 17

2.1. Water System Background ......................................................................................... 17

2.2. Financial Plan Assumptions ...................................................................................... 17

2.2.1. ACCOUNT AND WATER USE GROWTH ASSUMPTIONS .......................................... 17

2.2.2. NUMBER OF ACCOUNTS ............................................................................................ 17

2.2.3. WATER USE ................................................................................................................. 19

2.2.4. INFLATIONARY AND WATER PURCHASE COST ASSUMPTIONS ............................ 19

2.2.5. CAPITAL IMPROVEMENT PROGRAM (CIP) PLAN ..................................................... 21

2.2.6. STATUS QUO FINANCIAL PLAN (NO RATE INCREASES) ......................................... 23

2.2.7. DEBT SERVICE ............................................................................................................ 25

2.2.8. PROPOSED FINANCIAL PLAN AND REVENUE ADJUSTMENTS ............................... 25

2.2.9. FINANCIAL PLAN SHOWN GRAPHICALLY ................................................................. 28

2.2.10. CAPITAL FINANCING PLAN ............................................................................ 28

2.2.11. FISCAL YEAR ENDING RESERVE BALANCES .............................................. 29

2.2.12. DEBT COVERAGE ........................................................................................... 29

3. Water Cost of Service Analysis .................................................. 31

3.1. Functionalization of Operating Expenses ................................................................. 31 CITY OF PASADENA/ Water Financial Plan & Rate Study
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3.2. Allocation to Cost Components ................................................................................. 31

3.3. Allocation to Cost Components ................................................................................. 31

3.4. Revenue Requirement Determination ....................................................................... 36

3.5. Equivalent Meters ....................................................................................................... 36

3.6. Allocation of Private Fire Costs ................................................................................. 37

3.7. Projected Water Use under Proposed Rate Structure ............................................. 39

3.8. Unit Cost Derivation .................................................................................................... 40

3.9. Fire Protection Capacity ............................................................................................. 43

3.10. Allocation of Revenue Requirement to Cost Components and Calculation of Unit Costs ............................................................................................................................ 44

4. Water Rate Derivation ................................................................ 47

4.1. Rate Structure Selection............................................................................................. 47

4.2. Existing Fixed Service Charges ................................................................................. 50

4.3. Existing Volumetric Service Charges ($/HCF) .......................................................... 52

4.4. Proposed Fixed Service Charge ................................................................................ 53

4.4.1. METER MAINTENANCE AND EXTRA CAPACITY ....................................................... 53

4.4.2. PUBLIC FIRE COMPONENT ........................................................................................ 53

4.4.3. CUSTOMER COMPONENT .......................................................................................... 53

4.4.4. PROPOSED FY 2025 MONTHLY FIXED CHARGE ...................................................... 53

4.5. Proposed Private Fire Charges .................................................................................. 56

4.6. Proposed Variable Rates ............................................................................................ 56

4.6.1. CUSTOMER CLASSES ................................................................................................ 56

4.6.2. TIER DEFINITIONS ...................................................................................................... 57

4.6.3. VOLUMETRIC RATE DERIVATION .............................................................................. 58

4.6.4. WHOLESALE SUPPLY RATES .................................................................................... 58

4.6.5. BASE RATE .................................................................................................................. 60

4.6.6. EXTRA CAPACITY (PEAKING) RATE .......................................................................... 60

4.6.7. CONSERVATION RATE ............................................................................................... 62

4.6.8. FINAL RATE DERIVATION ........................................................................................... 64

5. Proposed Five-Year Rates .......................................................... 67

5.1. Proposed Fixed Charges ............................................................................................ 67

5.2. Proposed Private Fire Charges .................................................................................. 67

5.3. Proposed Variable Rates ............................................................................................ 68 CITY OF PASADENA/ Water Financial Plan & Rate Study
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6. Water Bill Impacts ...................................................................... 69

6.1. Single Family Residential Bill Impacts ...................................................................... 69

6.2. Multi-Family Residential Bill Impacts ........................................................................ 69

6.3. Commercial Bill Impacts............................................................................................. 69

7. Proposed Drought Rates ............................................................ 71

7.1. Drought Rate Background .......................................................................................... 71

7.1.1. REVENUE COLLECTION DURING A DROUGHT ........................................................ 71

7.1.2. CUSTOMER BILLS DURING A DROUGHT .................................................................. 71

7.2. Derivation of Drought Rates ....................................................................................... 72

7.2.1. DROUGHT RATE ADOPTION ...................................................................................... 84

8. Rate Comparisons ...................................................................... 85

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Tables
Table 1-1: Proposed Rate Revenue Adjustments................................................................................... 10 Table 1-2: Current Monthly Fixed Distribution & Customer Charge ........................................................ 11 Table 1-3: Current Public Fire Protection Surcharges ............................................................................ 12 Table 1-4: Current Variable Rates ($/HCF) ............................................................................................ 13 Table 1-5: Current Block Allocation Breakpoints (HCF) .......................................................................... 13 Table 1-6: Current Fixed Private Fire Service Charges .......................................................................... 13 Table 1-7: Proposed Monthly Fixed Charge ........................................................................................... 14 Table 1-8: Proposed Variable Rates ($/HCF) ......................................................................................... 15 Table 2-1: Account Growth and Water Use Assumptions ....................................................................... 17 Table 2-2: Projected Accounts by Meter Size ......................................................................................... 18 Table 2-3: Projected Private Fire Accounts by Meter Size ...................................................................... 19 Table 2-4: Projected Water Use by Customer Class (HCF), Existing Structure ...................................... 19 Table 2-5: Inflationary Assumptions ....................................................................................................... 20 Table 2-6: Water Purchase Cost Inflation ............................................................................................... 20 Table 2-7: Projected Water Supply by Source (AF) ................................................................................ 20 Table 2-8: Detailed Capital Improvement Program ................................................................................. 22 Table 2-9: Description of Line Items in Financial Plan Cashflow ............................................................ 23 Table 2-10: Status Quo Financial Plan ................................................................................................... 24 Table 2-11: Existing Water Debt Service ................................................................................................ 25 Table 2-12: Proposed Water Debt Service ............................................................................................. 25 Table 2-13: Proposed Rate Adjustments ................................................................................................ 26 Table 2-14: Proposed Financial Plan ..................................................................................................... 27 Table 3-1: Description of Cost Causation Components .......................................................................... 31 Table 3-2: System-Wide Peaking Factors .............................................................................................. 32 Table 3-3: Allocation of Functionalized FY 2025 O&M Costs to Cost Components ................................ 33 Table 3-4: Allocation of Assets to Cost Components .............................................................................. 35 Table 3-5: Revenue Requirement Determination for FY 2025 ................................................................ 36 Table 3-6: Water Equivalent Meters ....................................................................................................... 37 Table 3-7: Private Fire Connection Potential Demand ............................................................................ 38 Table 3-8: Public Fire Hydrants .............................................................................................................. 38 Table 3-9: Allocation of Private Fire Costs ............................................................................................. 39 Table 3-10: Projected Water Use by Customer Class (HCF), Proposed Structure ................................. 40 Table 3-11: Derivation of FY 2025 Units of Service ................................................................................ 42 CITY OF PASADENA/ Water Financial Plan & Rate Study
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Table 3-12: Calculation of Fire Service Capacity .................................................................................... 44 Table 3-13: Allocation of FY 2025 Revenue Requirement to Cost Components ..................................... 46 Table 4-1: BBTRs Research Summary .................................................................................................. 49 Table 4-2: Current Fixed Distribution & Customer Charges .................................................................... 50 Table 4-3: Current Public Fire Protection Surcharges ............................................................................ 52 Table 4-4: Current Variable Rates ($/HCF) ............................................................................................ 52 Table 4-5: Monthly Fixed by Meter Size ................................................................................................. 55 Table 4-6: Derivation of Private Fire Monthly Fixed Service Charge....................................................... 56 Table 4-7: Proposed Tier Breakpoints by Customer Class ..................................................................... 57 Table 4-8: Derivation of Unit Rates for Supply Costs by Source ($/HCF) ............................................... 58 Table 4-9: Supply Rates Derivation ........................................................................................................ 59 Table 4-10: Derivation of Extra Capacity Rates ...................................................................................... 61 Table 4-11: Derivation of Conservation Unit Rate .................................................................................. 63 Table 4-12: Final Derivation of Variable Rates by Customer Class/Tier (HCF) ....................................... 65 Table 5-1: Monthly Proposed Fixed Charges ......................................................................................... 67 Table 5-2: Monthly Proposed Fixed Service Charges ............................................................................ 67 Table 5-3: Proposed Variable Rates ($/HCF) for All Classes ................................................................. 68 Table 6-1: Single Family Monthly Bill Impacts for FY 2025 ..................................................................... 69 Table 6-2: Multi-Family Monthly Bill Impacts for FY 2025 ....................................................................... 69 Table 6-3: Commercial Small Monthly Bill Impacts for FY 2025 ............................................................. 70 Table 6-4: Commercial Medium Monthly Bill Impacts for FY 2025 ......................................................... 70 Table 6-5: Commercial Large Monthly Bill Impacts for FY 2025 ............................................................. 70 Table 7-1: Target Reduction at Each Stage of Drought, By Customer Class/Tier ................................... 72 Table 7-2: Estimated Water Use (HCF) at Each Stage of Drought, By Customer Class/Tier .................. 75 Table 7-3: Estimated Revenues at Each Stage of Drought, By Customer Class/Tier ............................. 78 Table 7-4: Calculation of Drought Rate Revenue Requirement at Each Stage ....................................... 81 Table 7-5: Drought Percentage Increases By Customer Class/Tier........................................................ 82 Table 7-6: FY 2025 Proposed Drought Rates by Customer Class/Tier ($/HCF) ..................................... 83 Table 8-1: Allocation of General Manager O&M Costs to Functional Components ................................. 87 Table 8-2: Allocation of Finance & Admin O&M Costs to Functional Components ................................. 88 Table 8-3: Allocation of Customer Service O&M Costs to Functional Components ................................ 91 Table 8-4: Allocation of Water Delivery O&M Costs to Functional Components ..................................... 93 Table 8-5: Derivation of FY 2025 Peaking Factors by Customer Class .................................................. 98

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Figures
Figure 1-1: Monthly Bill Comparisons for Neighboring Agencies ............................................................ 16 Figure 2-1: Financial Plan ...................................................................................................................... 28 Figure 2-2: Capital Financing Plan ......................................................................................................... 28 Figure 2-3: FY Ending Reserve Balance ................................................................................................ 29 Figure 2-4: Debt Coverage ..................................................................................................................... 30 Figure 8-1: Monthly Bill Comparisons for Neighboring Agencies ............................................................ 85

Appendices
Appendix A: O&M Functionalization
Appendix B: Max Day Peaking Factor Calculation
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1. Executive Summary

1.1. Background
In 2022, the City of Pasadena’s Water and Power Department (Department) engaged Raftelis to conduct a Water Rate Study (Study) which included a financial plan, cost of service study, and rate design. This report presents the financial plan and the resulting rates recommended for implementation beginning on July 1, 2024.

This Executive Summary summarizes the water financial plan and proposed rates and contains a description of the methodology, results, and recommendations. The Department’s last rate adjustment was effective on January 1, 2023. The last structural adjustment to rates was in 2009. Cost of service compliance studies were completed in 2016, 2018, and 2022, but no additional structural changes were made. In this study, the Department wishes to establish rates that:

1. Meet the Department’s fiscal needs in terms of operational expenses, reserve goals, debt coverage requirements, and capital investment to maintain the system

2. Are fair and equitable and therefore proportionately allocate the costs of providing service in accordance with California Constitution Article XIII D, section 6 (commonly referred to as Proposition 218)

3. Result in stable charges over time for customers

4. Promote water conservation

1.2. Methodology
The water rates presented in this report were developed using cost of service (COS) principles set forth by the American Water Works Association M1 Manual titled Principles of Water Rates, Fees and Charges (AWWA M1 Manual). Cost of service principles endeavor to distribute costs to customer classes in accordance with the way each class uses the water system which affects system sizing and operating costs.

This methodology is described in detail in Sections 3 and 4. The Base-Extra Capacity Method of the AWWA M1 Manual was used to distribute costs to customer classes and tiers. This method separates costs into five main components: (1) base (sometimes called delivery costs) (2) extra capacity costs, (3) customer costs, (4) meter maintenance costs and (5) fire protection costs. These components are the standard components of a cost of service study, however there are often additional cost components as described in Section 3.2. Base costs are associated with meeting average daily demand needs and include operations and maintenance costs and capital costs designed to meet average load conditions. Extra capacity costs are (both operating and capital costs) associated with meeting peak demand. Customer costs are associated with serving customers, such as meter reading, billing and customer service, etc.

Meter maintenance costs are those associated with maintaining and replacing meters. Fire protection costs are related solely to the fire protection function of a water system, such as fire hydrants and related mains and valves.

1.3. Results and Recommendations
Table 1-1 shows the revenue adjustments for the water enterprise as part of the proposed financial plan.

The revenue adjustment is the additional amount of revenue collected compared to the amount collected CITY OF PASADENA/ Water Financial Plan & Rate Study
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by current rates. Note that revenue increases are not the same as customer bill impacts, because cost allocations made as part of the cost of service analysis and the revised rate structure affects customer bills.

Table 1-1: Proposed Rate Revenue Adjustments
Fiscal Year
(FY) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Effective Date July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 July 1, 2028 Revenue
Adjustment 13.0% 12.0% 9.0% 8.0% 7.0%

1.3.1. FACTORS AFFECTING REVENUE ADJUSTMENTS
The following items affect the Department’s revenue requirement (i.e., costs) and thus the rate. The Department’s revenue requirement include: Operation and Maintenance (“O&M”) expenses, capital expenses, debt service and reserve funding.
» O&M Expenses: The Department’s O&M expenses are projected to increase each year, in line with general cost inflation and the increasing cost of employee benefits. Post pandemic inflation has been higher than the average for the last 20 years.
» Water Supply Costs: The Department’s expenses for imported water purchases are also expected to increase based on rate increases proposed by the Department’s wholesale water supplier; Metropolitan Water District (“MWD”).
» Capital Investment: The Department will complete significant replacement projects and repairs to its water system, totaling approximately $197million over the entire study period (or an estim ated average of $36 million per year). These improvements are required to maintain the reliability of the Department’s extensive water delivery system. The Department will use bond financing and cash to fund the projects.

A small portion of the projects will be funded by NASA and Contributions in Aid of Construction (from developers).

The Department will purposely make use of fund balances, as shown herein, to minimize customer rate impacts. Using fund balances to fund operating and capital costs lowers the amount of required rate revenue and therefore customer bills.

1.4. Current Water Rates
In this report, the terms fee and charge are often used interchangeably. The Department currently charges customers a fixed Distribution and Customer (D&C) charge, including a public Fire Protection Surcharge (FPS), (shown in monthly terms but billed bi-monthly), and a variable rate in dollars per hundred cubic feet ($/HCF. The Department also charges a uniform, $/HCF Water Capital Improvement Charge. This rate is designed to collect revenues for capital repair and replacement (R&R) projects that help maintain the functionality of the entire system. In addition, the Department maintains fixed private fire services charges for customers with private fire lines. All rates and tiers are shown in monthly terms; however, in practice, the Department bills the majority of its customers on a bi-monthly basis (equal to two months’ fixed charges and the individual customers’ bi-monthly water use charges).

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1.4.1. MONTHLY FIXED CHARGES
The Department currently bills its water customers two fixed charges: the fixed Distribution & Customer Charge and a Public Fire Protection Surcharge (FPS).

The D&C charge is designed to recover the costs associated with installing, maintaining, and servicing a customer’s meter, as well as the cost for customer service and meter reading and a portion of the fixed costs associated with extra capacity (e.g. sizing of distribution pipelines, storage tanks, etc.). The D&C charge is monthly fixed charge that varies by meter size; the difference between meter sizes are in accordance with the meter capacity ratios set forth by the AWWA. Table 1-7 shows the current D&C charges by meter size. All charges are shown in monthly terms.

Table 1-2: Current Monthly Fixed Distribution & Customer Charge Description Current

Fixed Charge
(All Customers)
𝟓𝟓 𝟖𝟖� " $26.08
𝟑𝟑 𝟒𝟒� " $26.08
1" $49.55
1 𝟏𝟏 𝟐𝟐� " $101.71
2" $234.75
3" $573.79
4" $881.50
6" $1,361.36
8" $2,214.32
10" $2,881.97

The FPS component recovers costs associated with public fire protection, or the maintenance and capacity costs required to maintain fire hydrants and public fire protection systems that all customers benefit from.

These costs also depend on the meter size and are therefore proportional to the meter size according to AWWA standards. The Department has chosen to absorb the public fire charge into the fixed meter charge so that all customers will simply be billed one fixed charge rather than two. Table 1-3 shows the current Fire Protection Surcharges. All values are in monthly terms.

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Table 1-3: Current Public Fire Protection Surcharges1
Description Current
Public Fire Surcharge
𝟓𝟓 𝟖𝟖� " $0.38
𝟑𝟑 𝟒𝟒� " $0.38
1" $0.70
1 𝟏𝟏 𝟐𝟐� " $2.68
2" $3.45
3" $8.13
4" $9.58
6" $22.00
8" $29.48
10" $38.20

1.4.2. VARIABLE RATE AND CAPITAL IMPROVEMENT CHARGE
The Department currently bills its water customers two volumetric charges: the Commodity rate and Capital Improvement Charge (CIC). The Commodity rate is an increasing 4-block (or tiered) rates structure, with varying water block allocations based on meter size. That is, all customers pay the same rates for use in each tier but have different tier breakpoints based on meter size. The Water Capital Improvement Charge (CIC) is designed to collect revenues for capital repair and replacement (R&R) projects that help maintain the functionality of the entire system. Table 1-4 shows the current volumetric rates2 and the water capital improvement charge (CIC).3 These rates are designed to recover the costs associated with serving each class and tier as discussed in the financial planning and cost of service sections. All values are shown in dollar amount per Hundred Cubic Feet (HCF).

1 As noted above, the City will absorb these costs into the Fixed Distribution & Customer Charge shown in Table 1-7. 2 The City currently bills each tier the same $/HCF rate, regardless of meter size. Tier breakpoints vary by meter size, however.
3 The CIC charge is a uniform ($/HCF) rate designed to recover capital costs associated with water system improvements required to treat and deliver water to City customers and a portion of debt service on Water System bonds. All customer classes and meter sizes pay the CIC charge each unit of HCF used during the respective billing period.

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Table 1-4: Current Variable Rates ($/HCF)
Description Current

Commodity Rates ($/HCF)
Block 1 $1.76489
Block 2 $3.74827
Block 3 $4.39376
Block 4 $5.33137

Water Capital Improvement Charge
($/HCF) $1.12404

Table 1-5 shows the current tier breakpoints by meter size. As shown below, tiers are determined based on meter size. For example, all customers with a 1’’ meter, regardless of customer class, are subject to the tier breakpoints listed in the second row of Table 1-5. The breakpoints determine how much water is charged at each of the rates (see block rate from Table 1-4). All values are in HCF.

Table 1-5: Current Block Allocation Breakpoints (HCF)

1.4.3. PRIVATE FIRE SERVICE CHARGES
Table 1-6 shows the Department’s current monthly private fire charges. As with the fixed D&C and FPS charges, these rates are based on meter size and help collect the revenue necessary to cover the costs of maintaining fire-fighting capacity for private fire customers.

Table 1-6: Current Fixed Private Fire Service Charges
Description FY 2025
4" $50.71
6" $94.82
8" $170.35
10" $250.53
12" $332.89
16" $332.89

Meter
Size(s) Block 1 Block 2 Block 3 Block 4
𝟓𝟓 𝟖𝟖� ", 𝟑𝟑 𝟒𝟒� " 0-8 9-24 25-34 >35
1’’ 0-12 13-40 41-60 >61
2’’ 0-48 49-188 189-290 >291
3’’ 0-116 117-500 501-860 >861
4’’ 0-225 226-1,000 1,001-1,800 >1,801
6’’ 0-500 501-5,600 5,601-8,800 >8,801
8’’ 0-500 501-5,600 5,601-10,000 >10,001
10-12’’ 0-500 501-24,000 24,001-32,000 >32,001
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1.5. Proposed Water Rates

1.5.1. FIXED CHARGE
The proposed monthly Fixed Charge is designed to recover the costs associated with installing, maintaining, and servicing a customer’s meter, as well as the cost for customer service and meter reading and a portion of the fixed costs associated with what is called extra capacity. Note that the revenues for capital repair and replacement projects (R&R) previously collected through the Capital Improvement Charge (CIC) have now been absorbed into the Fixed and Variable charges; the CIC will no longer be charged to customers. The monthly fixed charges vary by meter size; the rate differences between meter sizes are in accordance with the meter capacity ratios set forth by the AWWA. Table 1-7 shows the proposed Fixed Charge by meter size for FY 2025 through FY 2029. All charges are shown in monthly terms.

Table 1-7: Proposed Monthly Fixed Charge
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
All Customers
𝟓𝟓 𝟖𝟖� "
$38.62 $43.25 $47.15 $50.92 $54.48
𝟑𝟑 𝟒𝟒� "
$38.62 $43.25 $47.15 $50.92 $54.48
1" $60.19 $67.41 $73.48 $79.36 $84.91
1 𝟏𝟏 𝟐𝟐� " $114.11 $127.81 $139.31 $150.45 $160.98
2" $178.82 $200.28 $218.31 $235.77 $252.27
3" $475.40 $532.45 $580.37 $626.80 $670.68
4" $815.13 $912.94 $995.11 $1,074.72 $1,149.95
6" $1,731.84 $1,939.66 $2,114.23 $2,283.37 $2,443.20 8" $3,026.02 $3,389.14 $3,694.16 $3,989.70 $4,268.97 10" $4,535.89 $5,080.20 $5,537.42 $5,980.41 $6,399.04

1.5.2. VARIABLE RATE
The proposed variable rate structure consists of separate rates for Residential Single Family (SFR), Residential Multi-Family (MFR), and Commercial classes. Commercial classes are further divided into sub-classes according to meter size. All non-residential customer classes are now included in the Commercial class. The proposed variable rate structure consists of three tiers as opposed to the previous four. The variable rates are designed to recover the costs associated with water purchases, testing and treatment of local groundwater, water production, and a portion of capital improvement projects. The breakpoint for tier 1 is equal to the monthly indoor water use for four people calculated as 42 gallons per person per day. The tier 2 breakpoint is equal to the average summertime use for single family residential customers. This is a common method to set tier breakpoints. Table 1-8 shows the proposed variable rates for each customer class/tier. All values are shown in $/HCF.

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Table 1-8: Proposed Variable Rates ($/HCF)
Description Tier
Breakpoints FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Single Family Residential
Tier 1 0-7 $2.24818 $2.51796 $2.74458 $2.96414 $3.17163 Tier 2 7-29 $5.92680 $6.63802 $7.23544 $7.81428 $8.36128 Tier 3 Over 29 $6.44550 $7.21896 $7.86867 $8.49816 $9.09303

Multi-Family Residential
Tier 1 0-5 $2.24209 $2.51114 $2.73714 $2.95611 $3.16304 Tier 2 5-10 $5.87186 $6.57648 $7.16836 $7.74183 $8.28376 Tier 3 Over10 $6.24448 $6.99382 $7.62327 $8.23313 $8.80945

Commercial Small (𝟓𝟓 𝟖𝟖� "-1’’)
Tier 1 0-8 $2.21109 $2.47642 $2.69930 $2.91524 $3.11931 Tier 2 8-43 $5.84411 $6.54540 $7.13448 $7.70524 $8.24461 Tier 3 Over 43 $6.19440 $6.93773 $7.56212 $8.16709 $8.73879

Commercial Medium (1 ½’’-4’’)
Tier 1 0-52 $2.25510 $2.52571 $2.75303 $2.97327 $3.18140 Tier 2 52-265 $5.88262 $6.58853 $7.18150 $7.75602 $8.29894 Tier 3 Over 265 $6.36652 $7.13050 $7.77224 $8.39402 $8.98160

Commercial Large (6’’ & up)
Tier 1 0-850 $2.27128 $2.54383 $2.77278 $2.99460 $3.20422 Tier 2 850-5,050 $5.94146 $6.65444 $7.25333 $7.83360 $8.38195 Tier 3 Over 5,050 $6.55430 $7.34082 $8.00149 $8.64161 $9.24652

1.5.3. SURROUNDING AGENCY BILL SURVEY
Figure 1-1 shows a monthly 4 water bill comparison for the current and proposed rates against seven neighboring agencies. The survey assumes a single- family residential customer using 11 HCF of water per month, with a ¾’’ metered connection. This survey was conducted in January 2024 and should only be used as a reference point or as a snapshot in time.

4 Agencies with a bi-monthly billing cycle are adjusted to a monthly billing cycle by dividing fixed charges and tier widths in half.

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Figure 1-1: Monthly Bill Comparisons for Neighboring Agencies

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2. Water Enterprise Financial Plan
This section describes the water Financial Plan, which is used to determine the revenue requirement for rates based on costs associated with operating & maintenance expenses (O&M), capital improvement projects (CIP), debt coverage, and reserve targets. The revenue requirement was determined to meet the reserve targets for a 5-year period to satisfy the capital funding needs and the debt coverage requirements.

2.1. Water System Background
Located in eastern Los Angeles County, the Department of Pasadena Department of Water & Power provides water services to approximately 38,000 residential, commercial, and industrial customers over 25 square miles comprised of the unincorporated areas of Pasadena, Altadena, and San Gabriel.

The Department’s water system currently consists of approximately 520 miles of transmission and distribution pipeline, 14 reservoirs, 12 wells, 19 booster stations, and 2 treatment plants. Water demand is currently met through a combination of local groundwater from the Raymond Basin and imported water from the Metropolitan Water District of Southern California.

2.2. Financial Plan Assumptions
Raftelis created a five-year Financial Plan which models anticipated revenue and expenses. This report shows the Financial Plan and assumptions for the next 5 years (FY 2025 to FY 2029) to correspond with the rate development for these years. This is also known as the study period.

2.2.1. ACCOUNT AND WATER USE GROWTH ASSUMPTIONS
The revenue calculated for each fiscal year in the Financial Plan is a function of the number of accounts, account growth, water use trends, and existing rates. Table 2-1 shows the assumed account growth rates and water demand factors used to project future revenue.

Table 2-1: Account Growth and Water Use Assumptions
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Account Growth
SFR 0.2% 0.2% 0.2% 0.2% 0.2%
MFR 0.1% 0.1% 0.1% 0.1% 0.1%
Commercial 0.2% 0.2% 0.2% 0.2% 0.2%

Water Demand Factor 100.5% 100.5% 100.5% 100.5% 100.0%

2.2.2. NUMBER OF ACCOUNTS
Table 2-2 shows the projected number of water accounts by meter size and customer class for each year in the study period. Residential customer classes include Single Family Residential and Multi-Family Residential. All non-residential sub classes (except for Private Fire) are in the Commercial class under the new rate structure. These include Commercial, City, Industrial, and Commercial & Industrial (C&I) CITY OF PASADENA/ Water Financial Plan & Rate Study
357232.1 18

Emergency Interconnection. Account projections are based on the corresponding account growth inflation factors (shown above in Table 2-1).

Table 2-2: Projected Accounts by Meter Size
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Single Family Residential
𝟓𝟓 𝟖𝟖� " 15 15 15 15 15
𝟑𝟑 𝟒𝟒� " 16,880 16,914 16,948 16,982 17,016
1" 9,738 9,757 9,777 9,796 9,816
1 𝟏𝟏 𝟐𝟐� " 1,209 1,211 1,214 1,216 1,219
2'' 325 326 327 327 328
3'' 4 4 4 4 4
Subtotal – SFR 28,171 28,228 28,284 28,341 28,397

Multi-Family Residential
𝟓𝟓 𝟖𝟖� " 2 2 2 2 2
𝟑𝟑 𝟒𝟒� " 2,069 2,071 2,073 2,075 2,077
1" 1,216 1,218 1,219 1,220 1,221
1 𝟏𝟏 𝟐𝟐� " 490 490 491 491 492
2'' 563 564 564 565 565
3'' 92 92 92 92 93
4'' 47 47 47 47 47
6'' 24 24 24 24 24
Subtotal - MFR 4,504 4,508 4,513 4,518 4,522

Commercial
𝟓𝟓 𝟖𝟖� " 5 5 5 5 5
𝟑𝟑 𝟒𝟒� " 1,168 1,170 1,172 1,175 1,177
1" 1,013 1,015 1,017 1,019 1,021
1 𝟏𝟏 𝟐𝟐� " 504 505 506 507 508
2'' 863 865 867 869 870
3'' 161 161 161 162 162
4'' 168 168 168 169 169
6'' 73 73 74 74 74
8'' 24 24 24 24 24
10'' 4 4 4 4 4
Subtotal – Commercial 3,983 3,991 3,999 4,007 4,015
Total – All Accounts 36,658 36,727 36,796 36,865 36,934

Table 2-3 shows the projected Private Fire Accounts by meter size for the study period. Raftelis developed the projections below by applying the Commercial account growth factors to the Department-provided Private Fire account estimates for FY 2022.

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Table 2-3: Projected Private Fire Accounts by Meter Size Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Private Fire
4'' 722 723 725 726 728
6'' 394 394 395 396 397
8'' 144 144 144 144 145
10'' 2 2 2 2 2
12'' 3 3 3 3 3
16'' 3 3 3 3 3
Total – All Private Fire 1,267 1,270 1,272 1,275 1,277

2.2.3. WATER USE
Table 2-4 shows the projected water use for the study period under the current rate structure. The values shown do not include system water loss of 7%. The Department’s current structure consists of four tiers.

Customers pay the same rate for use in each tier; tier breakpoints (e.g. the permitted use for each tier) depends on meter size (see Table 1-5 above). Estimates for future variable revenues under existing rates may therefore be calculated by multiplying the total use for all customers in each tier by the corresponding rate.

All values are shown in HCF.

Table 2-4: Projected Water Use by Customer Class (HCF), Existing Structure Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
All Customers
Tier 1 4,943,184 4,967,900 4,992,739 5,017,703 5,017,703 Tier 2 4,479,521 4,501,918 4,524,427 4,547,049 4,547,049 Tier 3 516,150 518,730 521,324 523,931 523,931
Tier 4 240,638 241,841 243,051 244,266 244,266
Total – All Use (HCF) 10,179,493 10,230,390 10,281,541 10,332,949 10,332,949

2.2.4. INFLATIONARY AND WATER PURCHASE COST ASSUMPTIONS To ensure future O&M costs are reasonably projected, Raftelis made informed assumptions about inflationary factors related to O&M and capital costs. Table 2-5 shows the inflationary categories that were used to escalate the Department’s FY 2024 O&M expense budget, which is part of the Financial Plan. The inflationary factors shown in Table 2-5 reflect long-term averages for general and capital (construction) inflation and utility prices. Personnel, services and supplies, equipment, internal services, and utilities factors were developed in conjunction with Department staff and reflect the City of Pasadena and Department’s projections.

CITY OF PASADENA/ Water Financial Plan & Rate Study
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Table 2-5: Inflationary Assumptions
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
General 6.0% 4.0% 3.0% 3.0% 3.0%
Personnel 3.5% 3.5% 3.0% 2.5% 3.0%
Services and Supplies 3.0% 3.0% 3.0% 3.0% 3.0%
Equipment 5.0% 4.0% 3.0% 3.0% 3.0%
Internal Services 4.0% 4.0% 4.0% 4.0% 3.0%
Utilities 2.4% 2.4% 2.4% 2.4% 2.4%

Table 2-6 shows projected wholesale water purchase cost inflation. The Department has two potable water sources: groundwater from the Raymond Basin and purchased imported water. The Department purchases most of its imported water from the Metropolitan Water District (MWD). The MWD cost escalators shown in Table 2-6 are taken from MWD’s presentation titled Proposed Biennial Budget for FYs 2024/25 and 2025/26 Workshop #1, Item 9-4 on February 12, 2024. Historically, Raymond Basin Watermaster charges have not increased often and therefore this study assumes no increase in watermaster charges.

Table 2-6: Water Purchase Cost Inflation
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Water Supply
MWD RTS Charge 3.0% 10.8% 4.9% 13.4% 3.6%
MWD Capacity Charge -3.6% 18.5% 3.1% 15.9% 2.0%
MWD Volumetric Rate 16.6% 8.3% 11.5% 6.3% 4.6%

Raymond Basin Watermaster
Service 0.0% 0.0% 0.0% 0.0% 0.0%

Table 2-7 shows the estimated water sources/production in acre feet (AF) over the study period. Note that these values are in AF and must be converted to HCF by multiplying the values shown below by 435.6 before comparing to the total water consumption values shown above in Table 2-4. In addition, water loss from small leaks and inefficiencies that develop as the water system ages result in slightly lower values for water consumption than actual water purchases.

Table 2-7: Projected Water Supply by Source (AF)
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Local Groundwater 10,345 10,400 10,450 10,500 10,500
MWD Purchases 14,783 14,853 14,930 15,007 15,007
Total Water Supply 25,128 25,253 25,380 25,507 25,507

Raftelis used the assumptions shown in Table 2-5 through Table 2-7 to develop the Department’s status quo and proposed financial plans which projects revenue and expenses. The financial plan projects annual operating expenses and revenues, capital expenditures, reserve fund balances, and annual debt service coverage ratios to estimate additional rate revenue needed per year.

CITY OF PASADENA/ Water Financial Plan & Rate Study
357232.1 21

2.2.5. CAPITAL IMPROVEMENT PROGRAM (CIP) PLAN
Table 2-8 shows the Department’s proposed Capital Improvement Program for FY 2025 through FY 2029.

Per Department advice, it accounts for inflation. The Department will need to fund over $197 million of capital repair & replacement (R&R) projects over the study period. The Department plans to finance these capital projects through a combination of rate revenue, reserve funds (e.g., Water Fund, or WF), Contributions in Aid of Construction and NASA funding. The funding source is shown below in the funding source column. Adopted CIP numbers may differ from this Rate Study due to timing of model and rate development.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 22 Table 2-8: Detailed Capital Improvement Program
Description Funding
Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Capital Improvement Projects (CIP)
Field Services and Meter Reading Automation WF $70,630 $17,500 $17,500 $17,500 $17,500 Non-Potable Water Reuse Project WF $403,600 $500,000 $500,000 $1,000,000 $10,000,000 Emergency Generators - Water WF $60,540 $150,000 $625,000 Management Information Systems WF $183,638 $87,500 $70,000 $52,500 $52,500 Geographic Information System (GIS)
Enhancements WF $206,845 $70,000 $70,000 $52,500 $52,500 Computerized Maintenance Management
System WF $1,164,386 $960,000
Water Operations / Training and Storage /
Work Shop WF $70,630
Reservoir Improvements WF $403,600 $175,000 $300,000 $4,100,000 $3,550,000 Arroyo Seco Canyon Project CIC $4,520,320 $4,900,000 $1,500,000 $1,000,000 Booster Improvements CIC $575,130 $195,000 $2,445,000 $2,335,000 $295,000 Well Improvements CIC $988,820 $150,000 $150,000 $150,000 $150,000 Sunset Reservoir Improvements CIC $465,149 $25,366,550 $42,873,805 $3,815,132 Advanced Metering Infrastructure (AMI) CIC $2,324,825 $4,773,500 $1,991,000 Distribution Mains CIC $6,576,662 $8,000,000 $8,000,000 $8,000,000 $8,000,000 Meters and Services CIC $1,614,400 $800,000 $700,000 $900,000 $900,000 Water SCADA Improvements CIC $68,612 $25,000 $25,000 $30,000 $50,000 New Water Well CIC $378,375 $25,000 $5,223,000 $1,432,000 Facilities Site Improvement Initiative CIC $176,575 $175,000 $175,000 $175,000 $175,000 Customer Information System Managed
Services - Water CIC $618,013 $541,800 $541,800 $541,800 $541,800 Monk Hill Groundwater Treatment
Improvements NASA $5,756,345 $1,260,000
Customer Driven - Mains, Meters, and Services CIAC $2,018,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 Total – All CIP $28,645,095 $50,171,850 $66,582,105 $25,601,432 $26,409,300 CITY OF PASADENA / Water Financial Plan & Rate Study Report 23 2.2.6. STATUS QUO FINANCIAL PLAN (NO RATE INCREASES) Table 2 -9 describes each line item in the financial plan which is shown in Table 2-10 without revenue increases. The purpose of showing the financial plan without revenue increases is to show that revenue is not sufficient to cover costs as shown by the net cashflow in Line 24.

Table 2-9: Description of Line Items in Financial Plan Cashflow Category Line(s) Description
Revenues
Rate Revenues 2-3
All revenues from CURRENT fixed charges and variable rates, assuming no rate increase. Rate revenue from current rates and charges include revenues from the Fixed Service Charge, Fire Protection Surcharge, Capital Improvement Charge, variable rates, and Private Fire Charges (where applicable). Rate revenues were calculated using the water use and customer account assumptions from Section 2.2.1.

Revenue from Rate
Increases NA
Revenue from proposed rate increases are excluded in Table 2-10 (financial plan without rate increases), but included in Table 2-14 (line 4), the proposed financial plan with increases.

Miscellaneous, Interest
and Other Revenue
4-6
Additional revenues which lower the revenue required from rate revenue. All Other revenues include interest revenue, non- operating revenue, intergovernmental revenue, and any other miscellaneous revenues.

Expenses 21 Sum of O&M Expenses, Debt, & CIP.

O&M Expenses 10-16
Costs associated with maintenance and operations (O&M), as well as water supply costs. The O&M budget is projected using the inflationary factors discussed in
Table 2-5. Administration
expenses include general, salary, benefits, and utilities administrative costs, as well as water purchase cost and other related recurring expenses.

Debt 18-19
Costs associated with existing debt service. Annual debt service includes three revenue bonds:

• 2017A Water Bond
• 2020A Water Bond
• 2021A Water Bond

Rate-Funded CIP 21 Cash-funded capital projects associated with capital repair and replacement (R&R).

Net Cashflow 24 Total revenues less total expenses (Line 7 – Line 22).

Debt Coverage 25 Equal to the net operating revenue (all revenues less O&M) divided by the total debt service payments (Lines 15-16) Target Coverage 26
The target or minimum required debt coverage value for the calculation in Line 21. Maintaining target debt coverage helps assure the utility’s credit rating and overall financial stability.

Table 2-10 shows that current rate revenue is insufficient and to demonstrates the need for the rate increases that are discussed in the next section and shown in Table 2-13.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 24 Table 2-10: Status Quo Financial Plan
Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $58,149,305 $58,347,638 $58,546,798 $58,746,789 $58,800,099 3 CIC Revenues5 $11,442,157 $11,499,368 $11,556,864 $11,614,648 $11,614,648 4 Miscellaneous Revenue $2,651,808 $2,678,326 $2,705,110 $2,732,161 $2,759,482 5 Interest Income $345,416 $78,009 $0 $0 $0
6 All Other Revenues $1,473,974 $1,488,714 $1,503,601 $1,518,637 $1,533,824 7 Subtotal - All Revenues $74,062,662 $74,092,055 $74,312,372 $74,612,235 $74,708,052 8 9 Expenses
10 O&M
11 General Manager $1,516,225 $1,569,293 $1,616,371 $1,656,781 $1,706,484 12 Finance and Admin $6,825,093 $7,083,391 $7,295,893 $7,499,093 $7,724,066 13 Customer Service $3,563,452 $3,696,907 $3,807,814 $3,912,365 $4,029,736 14 Water Delivery $28,241,823 $29,313,071 $30,233,323 $31,120,533 $32,054,149 15 Water Purchase Costs $22,555,580 $25,434,480 $27,984,714 $30,731,744 $32,555,052 16 Subtotal - O&M $62,706,195 $67,097,142 $70,938,115 $74,920,516 $78,069,487 17 18 Existing Debt Service $5,717,250 $5,639,250 $5,563,000 $5,488,250 $5,399,750 19 Proposed Debt Service $0 $0 $0 $0 $0
20 21 Water Fund & CIC CIP $18,692,865 $42,108,165 $54,788,539 $19,848,717 $20,747,905 22 Subtotal – All Expenses $87,116,309 $114,844,557 $131,289,655 $100,257,483 $104,217,142 23 24 Net Cashflow ($13,053,647) ($40,752,502) ($56,977,282) ($25,645,248) ($29,509,089) 25 Calculated Debt Coverage 1.99 1.24 0.61 -0.06 -0.62
26 Target Coverage 1.10 1.10 1.10 1.10 1.10

5 The CIC Rate Component will be absorbed into the fixed and variable rates under the proposed rate design.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 25 2.2.7. DEBT SERVICE
Table 2-11 shows the Department’s existing debt service payments. Total annual debt service for existing debt is shown in line 18 of Table 2-10 and line 19 of Table 2-14. Projected debt coverage is shown in lines 25 and 26 of Table 2-10 and Table 2-14, respectively.

Table 2-11: Existing Water Debt Service
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
2017A Water Bond
Principal $670,000 $705,000 $740,000 $780,000 $820,000 Interest $535,250 $501,750 $466,500 $429,500 $390,500 Subtotal $1,205,250 $1,206,750 $1,206,500 $1,209,500 $1,210,500

2020A Water Bond
Principal $1,045,000 $1,080,000 $1,115,000 $1,150,000 $1,185,000 Interest $1,320,750 $1,268,500 $1,214,500 $1,158,750 $1,101,250 Subtotal $2,365,750 $2,348,500 $2,329,500 $2,308,750 $2,286,250

2020A Water Bond
Principal $1,145,000 $1,140,000 $1,140,000 $1,140,000 $1,130,000 Interest $1,001,250 $944,000 $887,000 $830,000 $773,000 Subtotal $2,146,250 $2,084,000 $2,027,000 $1,970,000 $1,903,000

Total Existing
Debt Service $5,717,250 $5,639,250 $5,563,000 $5,488,250 $5,399,750

Table 2-12 shows the Department’s proposed debt issuances and annual payments for the study period.

The proposed debt funds a significant portion of capital projects and lowers customer bill increases by allowing the Department to pay for capital over 30 years. Proposed debt service is shown in line 20 of Table 2-14.

Table 2-12: Proposed Water Debt Service
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Proposed Debt Issuances $30,000,000 $35,000,000
Annual Payment $1,896,284 $4,108,615 $4,108,615 $4,108,615 $4,108,615

2.2.8. PROPOSED FINANCIAL PLAN AND REVENUE ADJUSTMENTS
Table 2-13 shows the proposed revenue adjustments for the Study period. The proposed financial plan incorporates the revenue adjustments on July 1 of each fiscal year beginning in FY 2025.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 26 Table 2-13: Proposed Rate Adjustments
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Effective Date July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 July 1, 2028 Revenue Adjustment 13.0% 12.0% 9.0% 8.0% 7.0%

Table 2-14 shows the Department’s cash flow projection over the study period assuming the revenue adjustments from

Table 2-13 and shown in line 4 of Table 2-14. As shown below, there are wide fluctuations in yearly cashflow due to the funding of capital from reserves and debt. From FY 2025 to FY 2027, when capital is funded from debt proceeds, there are positive (black) cashflows. Under the proposed financial plan and rate increases, the Department is projected to meet its minimum debt coverage requirement in all study years which is a function of needing to have sufficient cash flow for future capital expenditures; annual revenue collection exceeds the minimum debt coverage requirements.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 27 Table 2-14: Proposed Financial Plan
Line Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $69,591,463 $69,847,005 $70,103,662 $70,361,437 $70,414,746 3 Revenue from Rate Increases $9,046,890 $18,551,365 $26,604,620 $34,467,557 $41,837,261 4 Miscellaneous Revenue $2,651,808 $2,678,326 $2,705,110 $2,732,161 $2,759,482 5 Interest Income $474,634 $620,490 $547,673 $419,096 $487,953 6 All Other Revenues $1,473,974 $1,488,714 $1,503,601 $1,518,637 $1,533,824 7 Subtotal – All Revenues $83,238,769 $93,185,901 $101,464,666 $109,498,888 $117,033,267 8 9 Expenses
10 O&M
11 General Manager $1,516,225 $1,569,293 $1,616,371 $1,656,781 $1,706,484 12 Finance and Admin $6,825,093 $7,083,391 $7,295,893 $7,499,093 $7,724,066 13 Customer Service $3,563,452 $3,696,907 $3,807,814 $3,912,365 $4,029,736 14 Water Delivery $28,241,823 $29,313,071 $30,233,323 $31,120,533 $32,054,149 15 Water Purchase Costs $22,555,580 $25,434,480 $27,984,714 $30,731,744 $32,555,052 16 Subtotal – O&M $62,706,195 $67,097,142 $70,938,115 $74,920,516 $78,069,487 17 18 Existing Debt Service $5,717,250 $5,639,250 $5,563,000 $5,488,250 $5,399,750 19 Proposed Debt Service $1,896,284 $4,108,615 $4,108,615 $4,108,615 $4,108,615 20 21 Water Fund & CIC CIP $51,889,569 $19,848,717 $20,747,905 22 Subtotal – All Expenses $70,319,728 $76,845,006 $132,499,299 $104,366,097 $108,325,756 23 24 Net Cashflow $12,919,041 $16,340,895 ($31,034,633) $5,132,790 $8,707,510 25 Calculated Debt Coverage 2.70 2.68 3.16 3.60 4.10
26 Target Coverage 1.10 1.10 1.10 1.10 1.10
CITY OF PASADENA / Water Financial Plan & Rate Study Report 28 2.2.9. FINANCIAL PLAN SHOWN GRAPHICALLY
Figure 2-1 shows the proposed Financial Plan from Table 2-14 in a graphical format. For years with revenue line below the expense stacked bars, a drawdown of reserves is projected due to expenditures exceeding revenue. FY 2025 and FY 2026 show funding of reserves because the CIP is funded through debt proceeds. FY 2027 and beyond funds CIP through cash and thus the drawdown of reserves.

Figure 2-1: Financial Plan

2.2.10. CAPITAL FINANCING PLAN
Figure 2-2 shows the capital financing plan. Blue bars indicate rate-funded capital projects; orange bars indicate bond-funded capital projects.

Figure 2-2: Capital Financing Plan

CITY OF PASADENA / Water Financial Plan & Rate Study Report 29 2.2.11. FISCAL YEAR ENDING RESERVE BALANCES
Figure 2-3 shows the fiscal year ending reserves balances. As shown, the Department is projected to reach reserve targets at the end of the study period.

Figure 2-3: FY Ending Reserve Balance

2.2.12. DEBT COVERAGE
Figure 2-4 shows the projected debt coverage. As shown below, the Department is projected to meet its minimum coverage target in all years of the study. Debt coverage is an annual measure of operating revenue divided by the annual debt service committee for debt repayment. The “target” coverage is the floor under which the debt service coverage would violate bond covenants and impact credit. There is not a definitive target because it is related to the amount of capital which is cash funded or debt funded.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 30 Figure 2-4: Debt Coverage

CITY OF PASADENA / Water Financial Plan & Rate Study Report 31 3. Water Cost of Service Analysis

3.1. Functionalization of Operating Expenses
A cost of service analysis distributes a utility’s revenue requirement (yearly revenue needed to cover operating and capital costs) to each customer class. The first step is to functionalize O&M expenses. Appendix A shows the functionalization of the Department’s O&M expenses.

3.2. Allocation to Cost Components
The second step is to allocate the functionalized O&M expenses to the cost causation components. These are an expanded version of the typical cost components mentioned in the AWWA Manual M1: Principles of Water Rates, Fees and Charges. For example base can be broken out into supply and base and a conservation component is added. The cost causation components and the corresponding explanations of each item are shown in Table 3-1.

Table 3-1: Description of Cost Causation Components
Line Category Description
1 Supply Costs associated with obtaining water.
2 Base Costs associated with serving water under average daily demand.
3 Max Day
Costs associated with serving water during peak water
flows which involves the infrastructure required to
meet system max day demand (e.g., storage tanks,
pumping stations, distribution pipeline size, etc.).
4 Meter Costs associated with meter reading, meter
maintenance, and other meter-related costs
5 Customer Costs associated with billing and customer service. 6 Fire Protection
Costs associated with the capacity to fight fires
through public fire hydrants and private fire
connections and the maintenance of fire hydrants and
other public fire protection infrastructure.
7 General Costs associated with general administrative and other miscellaneous expenses.
8 Conservation Costs associated with customer conservation outreach and other conservation programs.

This method is consistent with the AWWA M1 Manual and is widely used in the water industry to perform cost of service analyses.

3.3. Allocation to Cost Components
In a cost of service analysis, expenses are allocated to the cost causation components. Table 3-2 shows the system-wide peaking factors. The system-wide peaking factors are used to derive the cost component allocation bases (i.e., percentages) and used in Table 3-3 and Table 3-4.

To understand the interpretation of the percentage s, the base is first established as the average daily demand during the year – which is assigned an allocation basis of 1. If the base allocation basis is used to allocate an expense, the costs associated with that expense are to meet average daily demand (base) related costs. Expenses CITY OF PASADENA / Water Financial Plan & Rate Study Report 32 that are allocated to the cost causation components using the m aximum (“max”) d ay bases attribute 52% (1.00/1.92) of the demand (and therefore costs) to base (average daily demand) use and the remaining 48% to maximum day (peaking) use. The monthly to max day conversion factor (1.50 =1.92/1.28) converts bi-monthly peaking factors by class to max day peaking facto rs shown in Table 3-2. The system wide monthly peaking factor is known and calculated from monthly water use data. The system is designed for max day use as evidenced by the 1.92 peaking factor. In order to assess max day use by class, we use the max day conversion factor applied to each class – this estimates the water use during the max day by class.

Table 3-2: System-Wide Peaking Factors
System Peaking Factor Base Max Day Total
Monthly to
Max Day
Conversion
Base 1.00 100% 100%
Max Day 1.926 52% 48% 100%
System Wide
Monthly Peaking 1.28 1.50

Table 3-3 shows the allocation of the Department’s functionalized O&M expenses to the cost causation components. The percentages shown in lines 1 through 9 are used to allocate the functionalized costs to each cost causation component. The allocation basis is selected based on the type of cost for each line item and the proportion of those costs associated with each cost causation component (max day, supply, general, customer, etc.). For example, Transmission & Distribution (line 13) is allocated using the max day basis; this component of the O&M is therefore allocated in proportion to max day allocations identified in Table 3-2.

This is because the transmission and distribution system must be sized and operated to meet max day demands. Certain cost bases are identical to the cost causation components – such as Meter Maintenance/Meter – and are easily allocated to the cost component with the same (or similar) name. Line 20 shows the result of the allocation of all expenses to the appropriate cost causation components. The Operating portion of the revenue requirement is later allocated to the cost causation components using the allocation shown in line 21.

6 Per the Department’s “Water System Hydraulic Model Calibration” report performed by Carollo in December 2020.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 33 Table 3-3: Allocation of Functionalized FY 2025 O&M Costs to Cost Components Line Allocation
Basis Supply Base Max Day Meter Customer Fire
Protection General Conservation Total
1 Supply 100% 100%
2 Base 100% 100%
3 Max Day 52% 48% 100%
4 Meter 100% 100%
5 Customer 100% 100%
6 Fire
Protection 100% 100%
7 General 100% 100%
8 Conservation 100% 100%
9 Revenue
Offset 100%
10 Function Allocation
Basis Supply Base Max Day Meter Customer Fire
Protection General Conservation Total
11 Supply Supply $23,958,570 $23,958,570
12 Pumping Max Day $2,182,444 $2,007,849 $4,190,293 13 Transmission
&
Distribution
Max Day $3,788,468 $3,485,390 $7,273,858
14 Treatment Max Day $1,849,887 $1,701,896 $3,551,784 15 Customer
Service Customer $2,034,051 $2,034,051
16 Meter
Maintenance Meter $83,891 $83,891
17 Fire
Protection
Fire
Protection $122,107 $122,107
18 General General $18,720,357 $18,720,357
19 Conservation Conservation $2,771,283 $2,771,283 20 Total O&M
Expenses $23,958,570 $7,820,800 $7,195,136 $83,891 $2,034,051 $122,107 $18,720,357 $2,771,283 $62,706,195 21 Final
Allocation 38.2% 12.5% 11.5% 0.1% 3.2% 0.2% 29.9% 4.4% 100.0% CITY OF PASADENA / Water Financial Plan & Rate Study Report 34 The Department’s functionalized assets are allocated to the same cost components as the O&M expenses as shown in Table 3-4. Capital costs are allocated to the cost components in proportion to the functionalized assets to recognize that all assets need to be refurbished and replaced over time. The resulting capital allocation (shown in line 19) is used to allocate the capital portion of the revenue requirement to the cost causation components later in Table 3-13.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 35 Table 3-4: Allocation of Assets to Cost Components
Line Description Allocation
Basis Supply Base Max Day Meter Customer Fire
Protection General Conserv
ation
Revenue
Offset Total
1 Supply 100% 100%
2 Base 100% 100%
3 Max Day 52% 48% 100%
4 Meter 100% 100%
5 Customer 100% 100%
6 Fire Protection 100% 100%
7 General 100% 100%
8 Conservation 100% 100%
9 Revenue Offset 100% 100%
10 Description Allocation
Basis Supply Base Max Day Meter Customer Fire
Protection General Conserv
ation
Revenue
Offset Total
11 Supply Supply $7,803,960 $0 $0 $0 $0 $0 $0 $0 $0 $7,803,960 12 Pumping Max Day $0 $4,472,393 $4,114,602 $0 $0 $0 $0 $0 $0 $8,586,995 13 Treatment Max Day $0 $1,128,422 $1,038,148 $0 $0 $0 $0 $0 $0 $2,166,569 14 Storage Max Day $0 $5,940,984 $5,465,706 $0 $0 $0 $0 $0 $0 $11,406,690 15 Distribution Max Day $0 $124,961,802 $114,964,858 $0 $0 $0 $0 $0 $0 $239,926,660 16 Meters Meter $0 $0 $0 $19,510,083 $0 $0 $0 $0 $0 $19,510,083 17 General General $0 $0 $0 $0 $0 $0 $166,601,914 $0 $0 $166,601,914 18 Total Assets Supply $7,803,960 $136,503,602 $125,583,313 $19,510,083 $0 $0 $166,601,914 $0 $0 $456,002,873 19 Final
Allocation 1.7% 29.9% 27.5% 4.3% 0.0% 0.0% 36.5% 0.0% 0.0% 100.0%

CITY OF PASADENA / Water Financial Plan & Rate Study Report 36 3.4. Revenue Requirement Determination
Table 3-5 shows the revenue requirement determination for FY 2025, or the rate -setting year. Line 17 shows the total revenue required from rates – which is the total amount that rates are calculated to collect in Section

4. The revenue requirement is calculated by subtracting revenue offsets (line 11) and adjustments (line 15) from the total revenue requirements (line 5). The FY 2025 revenue requirement includes operating and maintenance (O&M) costs, water purchase costs, and existing and proposed debt service. Lines 8-11 show the revenue offsets from non-rate revenues. The adjustment in line 15 ensures the COS accounts for the annual cash balances and that the impending rate adjustment will take place at the start of FY 2025.

Table 3-5: Revenue Requirement Determination for FY 2025 Line Description Operating Capital Total
1 Revenue Requirements
2 O&M Expenses $62,706,195 $62,706,195
3 Existing Debt Service $5,717,250 $5,717,250
4 Proposed Debt Service $1,896,284 $1,896,284
5 Total Revenue Requirements $62,706,195 $7,613,534 $70,319,728 6 7 Less: Revenue Offsets
8 Miscellaneous Revenue $2,651,808 $2,651,808
9 Interest Revenue $474,634 $474,634
10 Non-Rate Revenues $1,473,974 $1,473,974
11 Total Revenue Offsets $4,600,416 $0 $4,600,416
12 13 Less: Adjustments
14 Adjustment for Cash Balance ($12,919,041) ($12,919,041) 15 Total Adjustments $0 ($12,919,041) ($12,919,041)
16 17 Total Revenue Requirement from Rates $58,105,778 $20,532,575 $78,638,353

3.5. Equivalent Meters
The concept of equivalent meters is used to allocate meter -related costs appropriately. By using equivalent meters instead of a total meter count, the analysis accounts for the fact that larger meters impose greater demands on the system and are more expensive to install, maintain, and replace than smaller meters. Equivalent meters are used in calculating a portion of customer bills known as meter service.

Equivalent meters are based on published meter hydraulic capacity. Equivalent meters represent the p otential demand on the water system in terms of the base meter size. A ratio of hydraulic capacity is calculated by dividing large meter capacities by the base meter capacity. The capacity ratio is calculated using the meter capacity in gallons per minute (GPM) provided in the AWWA M1 Manual Principles of Water Rates, Fees, and Charges (7
th Edition).

The base meter is the most common smallest meter, in this case, a ¾-inch meter. The capacity ratio (in column D of Table 3-6) is proportional to the potential flow through each meter size as established by the AWWA) hydraulic capacity ratios. For example, the potential flow through a 4-inch meter is 25 times that of a ¾-inch CITY OF PASADENA / Water Financial Plan & Rate Study Report 37 meter, and therefore, the meter capacity component of the fixed meter charge is 25 times that of the ¾- inch meter. Table 3-6 shows the total equivalent meters (Column E), calculated by taking the number of meters by size (Column C) and multiplied by the corresponding capacity ratio (Column D). The number of annual equivalent meters is calculated by multiplying the equivalent meters by twelve monthly billing periods. These totals are used as the denominator in developing unit costs for the rate components of the monthly fixed service charges.

Table 3-6: Water Equivalent Meters

Line
[A]

Meter Size
[B]
Customer Counts
By Meter Size
[C]
¾’’ Base Factor
Capacity Ratio
[D]

Equivalent
Meters
[E]
1 All Customers
2 𝟓𝟓 𝟖𝟖� "
22 1.00 22
3 𝟑𝟑 𝟒𝟒� "
20,117 1.00 20,117
4 1" 11,967 1.67 19,946
5 1 𝟏𝟏 𝟐𝟐� "
2,203 3.33 7,343
6 2'' 1,752 5.33 9,343
7 3'' 257 14.50 3,724
8 4'' 215 25.00 5,369
9 6'' 97 53.33 5,191
10 8'' 24 93.33 2,249
11 10'' 4 140.00 562
12 Total 36,658 73,867

3.6. Allocation of Private Fire Costs
Water systems provide two types of fire protection: private fire protection that provides water for fires to private buildings and sprinkler systems as well as public fire protection for firefighting, visible as hydrants on the street.

Raftelis uses the potential flow through private fire lines and public hydrants to determine the share of total fire costs responsible for each.

Table 3-7 shows the equivalent potential demand from private fire lines. Each fire connection size has a different fire flow demand factor like the hydraulic capacity factor of a water meter

7. The Hazen-Williams equation is
used to calculate equivalent potential demand by raising the pipeline’s d iameter (Column D) to the power of

2.638. The resulting equivalent potential demand per connection (Column E) is then multiplied by the total number of private fire lines of each size (Column C) to yield the total equivalent potential demand at each connection size (Column F). The private fire potential demand is compared to public potential demand to allocate total fire protection costs.

7 Total demand for fire connections is based on line diameter and will vary from potable demand, based on meter size. 8 Hazen-Williams equation per AWWA M1 Manual.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 38 Table 3-7: Private Fire Connection Potential Demand

Line
[A]

Meter Size
[B]
No. of Private
Fire
Connection
[C]

Diameter
[D]
Potential Demand
per Connection
[E]
Equivalent
Potential Demand
[F]
1 Private Fire
2 4'' 722 4.00 38.32 27,662
3 6'' 394 6.00 111.31 43,809
4 8'' 144 8.00 237.21 34,056
5 10'' 2 10.00 426.58 857
6 12'' 3 12.00 689.04 2,075
7 16'' 3 16.00 1,468.37 4,423
8 Total 36,658 112,882

Table 3-8 shows the equivalent potential demand from public fire hydrants. The Hazen- Williams equation is used to calculate equivalent potential demand by raising the pipeline’s diameter (Column D) to t he power of

2.639. The resulting equivalent potential demand per connection (Column E) is then multiplied by the total number of hydrant connections (Column C) to yield the total equivalent potential demand (Column F). The public potential fire capacity is compared to the private fire capacity to allocate fire protection costs.

Table 3-8: Public Fire Hydrants

Line
[A]

Meter Size
[B]
No. of Hydrant
Connections
[C]

Diameter
[D]
Potential Demand
per Connection
[E]
Equivalent
Potential Demand
[F]
1 Public Fire
2 6''

3,157 6.00 111.31 351,409
3 Total 3,157 351,409

Table 3-9 summarizes the equivalent potential demand through private fire connections (Table 3-7) and public hydrants (Table 3-8). The potential fire demand percentage, and therefore cost allocation to public and private fire (Column C), is calculated by dividing the equivalent potential demand (line 1 or line 2, Column C) by the total potential demand (line 3, column C). Seventy-five percent of fire capacity, and therefore costs, relate to public fire and will be recovered through the monthly fixed charges. The remaining 24.3% is attributable to private fire service and will be recovered through private fire service charges.

9 Hazen-Williams equation, per AWWA M1 Manual.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 39 Table 3-9: Allocation of Private Fire Costs

Line
[A]

Meter Size
[B]
Potential Demand
per Connection
[C]
1 Total Private Fire Demand 112,882
2 Total Public Fire Demand 351,409
3 Total Potential Fire
Demand 464,291
4 Percent Allocated to Public
Fire Protection 75.7%
5 Percent Allocated to Private
Fire Protection 24.3%

3.7. Projected Water Use under Proposed Rate Structure
Table 3-10 shows the projected water use for the study period under the proposed rate structure. The Department’s proposes to create the following customer classes: Single Family Residential, Multi-Family Residential, and Small, Medium and Large, Commercial. For Multi-Family Residential, the tier breakpoints are per dwelling unit rather than based on meter size. Since the breakpoints are per dwelling unit (which accounts for water needs), there is no need to break multi-family out by meter size.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 40 Table 3-10: Projected Water Use by Customer Class (HCF), Proposed Structure Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Single Family
Tier 1 1,802,928 1,811,942 1,821,002 1,830,107 1,830,107 Tier 2 2,237,452 2,248,639 2,259,882 2,271,182 2,271,182 Tier 3 1,043,391 1,048,608 1,053,851 1,059,120 1,059,120 Subtotal 5,083,771 5,109,190 5,134,735 5,160,409 5,160,409

Multi-Family
Tier 1 1,201,249 1,207,256 1,213,292 1,219,358 1,219,358 Tier 2 309,080 310,625 312,179 313,739 313,739
Tier 3 373,454 375,321 377,197 379,083 379,083
Subtotal 1,883,783 1,893,202 1,902,668 1,912,181 1,912,181

Commercial Small (𝟓𝟓 𝟖𝟖� "-1’’)
Tier 1 116,410 116,992 117,577 118,165 118,165
Tier 2 148,917 149,662 150,410 151,162 151,162
Tier 3 70,679 71,033 71,388 71,745 71,745
Subtotal 336,007 337,687 339,375 341,072 341,072

Commercial Medium (1 ½’’-4’’)
Tier 1 558,320 561,111 563,917 566,736 566,736
Tier 2 702,802 706,316 709,848 713,397 713,397
Tier 3 333,614 335,282 336,959 338,644 338,644
Subtotal 1,594,737 1,602,710 1,610,724 1,618,777 1,618,777

Commercial Large (6’’ & up)
Tier 1 446,161 448,392 450,634 452,887 452,887
Tier 2 563,382 566,199 569,030 571,875 571,875
Tier 3 271,652 273,010 274,375 275,747 275,747
Subtotal 1,281,195 1,287,601 1,294,039 1,300,509 1,300,509

Total – Retail Sales/All Use
(HCF) 10,179,493 10,230,390 10,281,541 10,332,949 10,332,949

3.8. Unit Cost Derivation
The end goal of a cost-of-service analysis is to distribute the revenue requirement to each customer class and to do so we must calculate unit costs by cost component. Raftelis calculated unit costs for each component by assessing total water demand and total bills (or the total number of accounts serviced by the Department multiplied by six billing periods) to calculate equivalent service units.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 41 Table 3-11 shows the derivation of the units of service which are used in calculating unit costs.

Projected FY 2025 water use by customer class and tier (Column D) was divided by 365 days to determine daily use (Column E). Total capacity (Column G) was determined by multiplying the average daily use by the corresponding Max Day peaking factors shown in Column F. For a detailed explanation of how peaking factors were calculated, see Table 8-5 in Appendix B. The total number of accounts (Column I) is then multiplied by six billing periods to get the total bi-monthly annualized bills shown in Column K. Equivalent meters (calculated earlier in Table 3-6) are shown in Column J. These units (total potential demand, equivalent meters, and annual bills) represent the units of service by customer class (and tier for potential demand) that provide the basis for the cost allocation to customer classes in later sections.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 42 Table 3-11: Derivation of FY 2025 Units of Service

Line
[A]

Peaking Requirements (excluding
Fire Protection)
[B]
Bi-
Monthly
Tier
Breakpoint
[C]

Annual
Use
[D]

Average
Day Use
[E]
Max Day
Peaking
Factor
[F]
Total
Capacity
(HCF/day)
[G]
Extra
Capacity
(HCF/day)
[H]

Number
of
Customers
[I]

Equivalent
Meters
[J]

Annualized
Bills
[K]
1 Single Family 5,083,771 13,928 1.99 27,692 13,764 28,171 38,948 169,028 2 Tier 1 14 1,802,928 4,940 1.60 7,894 2,954
3 Tier 2 58 2,237,452 6,130 2.03 12,469 6,339
4 Tier 3 >58 1,043,391 2,859 2.56 7,329 4,471
5 6 Multi-Family 1,883,783 5,161 1.68 8,661 3,500 4,504 12,532 27,024 7 Tier 1 10 1,201,249 3,291 1.58 5,190 1,899
8 Tier 2 20 309,080 847 1.84 1,561 714
9 Tier 3 >20 373,454 1,023 1.87 1,910 887
10 11 Commercial Small (𝟓𝟓 𝟖𝟖� "-1'') 336,007 921 1.64 1,509 589 2,186 2,861 13,114 12 Tier 1 17 116,410 319 1.47 469 150
13 Tier 2 87 148,917 408 1.75 713 305
14 Tier 3 >87 70,679 194 1.69 328 134
15 16 Commercial Medium (1 ½’’-4'') 1,594,737 4,369 1.88 8,196 3,827 1,696 12,806 10,175 17 Tier 1 105 558,320 1,530 1.62 2,481 952
18 Tier 2 530 702,802 1,925 1.88 3,622 1,696
19 Tier 3 >530 333,614 914 2.29 2,093 1,179
20 21 Commercial Large (6''+) 1,281,195 3,510 2.12 7,458 3,948 101 6,720 608 22 Tier 1 1,700 446,161 1,222 1.68 2,051 829
23 Tier 2 10,100 563,382 1,544 2.08 3,218 1,675
24 Tier 3 >10,100 271,652 744 2.94 2,189 1,445
25 Total 10,179,493 24,743 48,305 25,629 36,658 73,867 219,949 CITY OF PASADENA / Water Financial Plan & Rate Study Report 43 3.9. Fire Protection Capacity
Table 3-12 shows estimated fire protection capacity in line 4. It is derived by assuming certain fire flo ws. Line 1 and 2 show the fire flow assumptions: two fires (one residential and one commercial). The first fire (Multi - Family Residential) is assumed to last 2 hours and have a maximum flow rate of 2,000 gallons per minute (gpm). The second fire (Commercia l) is assumed to last 3 hours and have a flow rate of 3,000 gpm. These assumptions are used to calculate the fire capacity shown in line 4. Max day capacity demanded by fire protection is determined by converting 2,000 and 3, 000 GPM, respectively, to gallo ns per hour , then multiplying by the duration of each fire (2 and 3 hours, respectively). Then, these values are converted from gallons per hour to HCF per day (line 4, Columns E and F). Column F is the Max Hour fire demand in excess of Max Day and the units are in HCF per day. The interpretation of lines 4, 5 and 6 in Table 3-12 is that line 6 shows total extra capacity (for fire and potable demands) and line 4 shows only the capacity for fire flow.

Dividing line 4 into line 6, yields line 8 – the portion of extra capacity for fire protection.

The Max Day Extra Capacity without fire in E5 is th e total extra capacity from line 25, Column H of Table 3-11. Raftelis estimated Max Hour demand in excess of Max Day for extra capacity (excluding capacity for fire, in E8) by multiplying Max Day extra capacity line 25, Column G of Table 3-11 by a Max Day to Max Hour conversion factor of 1.66 (to convert from Max Day to Max Hour 10), then subtracting existing max day capacity
(line 35, Column G of Table 3 -10). The resulting Max Hour demand in excess of Max Day value is shown in line 5, Column E of Table 3-12. Total extra capacity costs are then determined by summing the values for line 4 and 5 in each column, as shown in line 6 of Table 3-12. The overall goal is to determine the percent of system capacity for fire protection. The percentages shown in line 8 were calculated by dividing line 4 into line 6. These represent the percent allocation of extra capacity to fire protection and is used to assign a cost for fire protection along with the percentages derived in Table 3-9.

10 The max day to max hour conversion factor is 1.66, which is a typical max hour design factor with which water systems are designed to ensure the system can deliver max hour flows. Max hour flows, in this case, are needed to estimate the capacity to fight fires since fires are usually high flow, short term (hours) events.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 44 Table 3-12: Calculation of Fire Service Capacity

Line
[A]

Meter Size
[B]
Fire 1
MFR
Residential
[C]
Fire 2
Commercial
[D]
Max Day Extra
Capacity
[E]
Max Hour Demand in
Excess of Max Day
[F]
1 Hours for Fire 2.0 3.0
2 Gals/minute 2,000

3,000
3 4 Capacity Demanded for
Fire (HCF/day) 1,043 8,582
5 Potable Extra Capacity
excluding Fire Capacity 25,629 31,881
6 Total Extra Capacity -
Fire and Potable
(HCF/day)
26,671 40,464
7 8
Percent of Extra
Capacity Costs due to
Fire Protection

3.91% 21.21%

3.10. Allocation of Revenue Requirement to Cost
Components and Calculation of Unit Costs
Table 3-13 shows the revenue requirement allocation to cost components and the calculation of unit costs for each component in line 15. Lines 1-3 show the preliminary allocation of FY 2025 operating and capital revenue requirements from Table 3-5 to the cost components using the O&M and capital allocations determined earlier in Table 3-3 and Table 3-4, respectively. Lines 4-6 show the reallocation of general to the other cost components based on the resulting allocation from line 3. Adjustments are made in lines 8 to 11 as follows:
1) Line 8 allocates costs to the public fire protection component (col F), which is recovered through the fixed charge (derived in the following section). The amount in E8 is based on the fire calculations in Section 3.9. The percentages in line 8 of Table 3-12 are added and multiplied by line 4 of Table 3-9 and by cell E6 in Table 3-13. This yields the cost for public fire protection ($3.4M). Direct fire protection is also added from column I.
2) Line 9 allocates private fire protection costs to the private fire cost component in column L. The calculations are very similar to the public fire protection allocation above. The percentages in line 8 of Table 3-12 are added and multiplied by line 5 of Table 3-9 and by cell E6 in Table 3-13. This yields the cost for private fire protection shown in cell L9.
3) Lines 10 and 11 reassign extra capacity and base costs to the meter cost component. These costs are considered fixed costs that are incurred regardless of water use – sometimes called Ready to Serve costs that can be collected based on meter size. The Department has selected the allocated amounts (80% and 43% of total Max Day and Base costs, respectively) to maintain revenue stability consistent with current rates.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 45 4) Line 12 sums line 6 with the adjustments made in lines 8-11. The unit rates for fixed, variable, and private fire rate components are then calculated in line 15 by dividing the total cost for each component (line 12) by the appropriate units of service shown in line 13. These unit rates are used to allocate costs to customer classes to derive rates to serve each class.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 46 Table 3-13: Allocation of FY 2025 Revenue Requirement to Cost Components Line
[A]
Description
[B]
Supply
[C]
Base
[D]
Max Day
[E]
Public Fire
Protection
[F]
Meter
[G]
Customer
Billing
[H]
Direct
Public Fire
[I]
General
[J]
Conservation
[K]
Private Fire
[L]
Total
[M]
1 Operating
Expenses $22,200,859 $7,247,030 $6,667,267 $77,737 $1,884,823 $113,149 $17,346,945 $2,567,969 $58,105,778 2 Capital
Expenses $351,391 $6,146,388 $5,654,677 $878,486 $0 $0 $7,501,633 $0 $20,532,575 3 Total COS $22,552,250 $13,393,417 $12,321,944 $0 $956,223 $1,884,823 $113,149 $24,848,579 $2,567,969 $0 $78,638,353 4 % Alloc.
w/o Gen. 41.9% 24.9% 22.9% 0.0% 1.8% 3.5% 0.2% 4.8% 0.0% 100% 5 Reallocation
of General $0 $16,605,363 $5,692,212 $441,734 $870,708 $52,270 ($24,848,57 9) $1,186,292 $0 $78,638,353
6 Subtotal -
Reallocated $22,552,250 $29,998,780 $18,014,155 $0 $1,397,957 $2,755,531 $165,419 $0 $3,754,261 $0 $78,638,353 7 8
Alloc. Pub.

Fire Cap. to
Fixed
($3,424,897) $3,590,316 ($165,419)
9 Alloc.Priv.

Fire Cap. to
Priv. Fire
($1,100,166) $1,100,166
10 Alloc.of
Extra Cap.
to Meter
($10,791,274) $10,791,274
11 Alloc. of
Base to
Meter Cap.
($12,899,475) $12,899,475
12 Total Adj.

COS $22,552,250 $17,099,305 $2,697,818 $3,590,316 $25,088,706 $2,755,531 $0 $0 $3,754,261 $1,100,166 $78,638,353 13 Service
Units 10,179,493 10,179,493 25,629 73,867 73,867 36,658 10,179,493 112,882 14 Unit HCF HCF HCF/day equivalent
meters
no.
accounts HCF
equivalent
private fire
connections

15 Unit Cost $2.22 $1.68 $105.27 $48.61 $339.65 $75.17 $0.37 $9.75 16 Units of
Service $/HCF $/HCF $/HCF/day
$/equivale
nt meter/
year
$/equivalen
t meter/
year
per
account
per year
$/HCF yearly
CITY OF PASADENA / Water Financial Plan & Rate Study Report 47 4. Water Rate Derivation

4.1. Rate Structure Selection
The rate study considered five rate structures. They were discussed with the Municipal Services Committee (MSC);
1) Uniform rates,
2) Tiered rates by meter size (the Department’s current rate structure), 3) (Traditional) Tiered rate by customer class (Single Family Residential is tiered, other classes are not),
4) Tiered rates by customer class and meter size,
5) Budget Based Tiered Rates (BBTRs).

At the July 25, 2023 MSC meeting, Staff and Raftelis presented the pros and cons of each of the above rate structures with an expanded discussion on BBTRs. The committee directed staff to further investigate BBTRs. At this meeting rate structures 1 and 3 were not recommended by Staff.

From July to December of 2023, Staff and Raftelis researched BBTRs by discussing BBTRs with Eastern Municipal Water District (EMWD), Las Virgenes Municipal Water District (LVMWD), and Irvine Ranch Water District (IRWD). Each provided lessons learned, pros and cons and why they felt BBTRs were right for them.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 48 Table 4-1 provides a summary of the takeaways from these discussions.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 49 Table 4-1: BBTRs Research Summary
Discussion Topic EMWD, LVMWD, IRWD Pasadena DWP
Lot Size
• More uniform and therefore
easier to estimate irrigable
area
• Older and varied and
therefore more variable
irrigable areas and more likely
to create customer variance
requests
Growth Maturity
• Still growing and therefore
more opportunity to
regulate size and types of
irrigable areas
• More mature and therefore
turf and irrigable areas don’t
reflect recent model landscape
ordinances
Data Collection & Implementation
Effort
• Each agency had ongoing
data collections efforts
regarding irrigable areas and
weather data
• Each agency had added
additional staffing
• Each agency had to modify
their billing system
• Variance requests: EMWD
in particular mentioned over
3,000 variance requests per
year, they serve over a
population of over 900,000

• Only 2/3 of single-family
irrigable data from the state;
ideally would have all single
family data
• No commercial irrigable
area data currently
• No nearby state weather
station for
Evapotranspiration data
• Delay in AMI deployment

Implementation Time • 3 to 10 years depending on
customer class
• DWP expects a 5-year
implementation due, which
includes 3 years for AMI
implementation
Meter Type During BBTR
Implementation
• Automated Meter Reading
(AMR)
• DWP feels AMI would be
optimal since customers can
get real time data to know if
they are exceeding their
budget
Previous Rate Structure
• EMWD and IRWD had
uniform rates and therefore
BBTRs presented more of a
conservation signal
• Tiered rate structure likely
lessening the conservation
impact from BBTRs

At the January 23, 2024 MSC meeting Staff and Raftelis presented the results of their research as summarized in Table 4-1. Staff recommended, due to the reasons mentioned in Table 4-1, tiered rates by customer class and meter size. The MSC directed staff to proceed with rate by customer class and meter size.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 50 4.2. Existing Fixed Service Charges
The Department currently bills its water customers two fixed charges: the monthly Fixed Distribution and Customer (D&C) Charge, which includes the Public Fire Protection Surcharge.

The Fixed D&C Charge is designed to recover the costs associated with installation, maintaining, and servicing a customer’s meter, as well as the customer service costs and a portion of the maintenance and repair of the distribution system. This cost is proportional to meter size and goes up with meter size according to standards set forth by the AWWA. Table 4-2 shows the current Fixed D&C Charges by meter size as of January 1, 2023 (FY 2023). All charges are shown monthly.

Table 4-2: Current Fixed Distribution & Customer Charges Description Current
(01/01/2023)
Fixed Rates
(All Customers)
𝟓𝟓 𝟖𝟖� " $26.08
𝟑𝟑 𝟒𝟒� " $26.08
1" $49.55
1 𝟏𝟏 𝟐𝟐� " $101.71
2" $234.75
3" $573.79
4" $881.50
6" $1,361.36
8" $2,214.32
10" $2,881.97

The second fixed charge is the Public Fire Protection Surcharge. This component recovers costs associated with public fire protection, or the maintenance and capacity costs required to maintain fire hydrants and public fire protection systems that all customers benefit from. These costs are proportional to meter size.

For the proposed monthly Fixed charges, the Department has chosen to absorb the public fire charge into the D&C charge resulting in one fixed charge.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 51 Table 4-3 shows the current Fire Protection Surcharges. All values are shown in monthly terms.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 52 Table 4-3: Current Public Fire Protection Surcharges11 Description Current
(01/01/2023)
Public Fire Surcharge
𝟓𝟓 𝟖𝟖� " $0.38
𝟑𝟑 𝟒𝟒� " $0.38
1" $0.70
1 𝟏𝟏 𝟐𝟐� " $2.68
2" $3.45
3" $8.13
4" $9.58
6" $22.00
8" $29.48
10" $38.20

4.3. Existing Volumetric Service Charges ($/HCF)
The Department’s current rate structure for variable (volumetric) rates is an inclining block rate structure based on meter size and a Capital Improvement Charge which is a uniform rate as a $/HCF. That is, all customers pay the same rates for use in each tier, but have different tier breakpoints based on meter size.

Table 4-4 shows the current volumetric rates12 and the volumetric water capital improvement charge (CIC).13 All values are volumetric in $/HCF.

Table 4-4: Current Variable Rates ($/HCF)
Description Current
Variable Rates ($/HCF)
Tier 1 $1.76489
Tier 2 $3.74827
Tier 3 $4.39376
Tier 4 $5.33137

Water Capital Improvement Charge
($/HCF) $1.12404

11 As noted above, the City will combine these costs into the Fixed Charge shown in Table 1-7. 12 The City currently bills each tier the same $/HCF rate, regardless of meter size. Tier breakpoints vary by meter size, however.
13 The CIC charge is a uniform ($/HCF) rate designed to recover capital costs associated with water system improvements required to treat & deliver water to City customers and a portion of debt service. All customer classes and meter sizes pay the CIC charge each unit of HCF used during the respective billing period.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 53 4.4. Proposed Fixed Service Charge
There are three cost components that comprise the monthly service charge: meter maintenance & extra capacity, public fire protection, and customer service. A description of each component of the fixed charge and the calculation of the monthly fixed service charge for each meter size is shown below.

4.4.1. METER MAINTENANCE AND EXTRA CAPACITY
The meter service component recovers two types of costs: 1) costs associated with maintaining and servicing meters (meter service component) and 2) capacity (also known as peaking) costs. Both costs increase as the meter size increases and are proportional to the AWWA hydraulic capacity ratios shown in column D of Table 3-6. The capacity ratios, which are a function of a meter’s safe maximum flow rate, are used to increase the meter service component for larger capacity meters – as shown in column D of Table 4-5. This assumes that the potential capacity (peaking) demand is proportional to the potential flow through each meter size as established by the AWWA hydraulic capacity ratios. The ratios shown in column D of Table 4-5 show the ratio of potential flow through each meter size compared to the flow through a 5 8� -inch meter. The ¾-inch meter is used as the base since it is the smallest and most numerous meter size. Larger meters have the potential to demand more peak capacity. For example, column C of Table 4-5 shows that the hydraulic capacity of a 2-inch meter is 5.33 times that of a ¾-inch meter; therefore the meter service component is 5.33 times that of the ¾-inch meter. The unit rate from the FY 2025 COS (line 15, Column G of Table 3-13) is multiplied by the corresponding capacity ratio in Column D of Table 4-5 to derive the meter component of the monthly fixed rate for all Department customers at each meter size.

4.4.2. PUBLIC FIRE COMPONENT
The unit rate for public fire costs was derived earlier in Column F of Table 3-13. This component is also proportional to meter size and the corresponding capacity ratios; as with meter-related costs, the public fire component is calculated by multiplying the unit rate from Table 3-13 by the capacity ratios shown in Column D of Table 4-5.

4.4.3. CUSTOMER COMPONENT
The unit rate for customer costs was derived earlier in Column H of Table 3-13. Unlike meter and public fire costs, this component is not dependent on meter size and therefore equivalent to the unit cost shown in line 15, Column H of Table 3-13.

4.4.4. PROPOSED FY 2025 MONTHLY FIXED CHARGE
Table 4-5 shows the derivation of the monthly Fixed Charge. The total meter service charge is calculated by summing the meter, public fire, and customer components for each meter size (Columns E through G).

Note that the Fixed Charge also includes revenues previously collected via the Capital Improvement Charge (CIC). These revenues fund capital repair and replacement (R&R) projects necessary to maintain the water system. The proposed FY 2025 COS rates (which include the 13% rate revenue increase shown for FY 2025 in Table 1-1) are shown in Column H. The difference as compared to current monthly fixed CITY OF PASADENA / Water Financial Plan & Rate Study Report 54 service charges are shown in Columns I through K. The small meters (5 8� ” and ¾”) meters are increasing due to the revision of the customer service charge which better reflects customer service costs.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 55 Table 4-5: Monthly Fixed by Meter Size

Line
[A]

Meter Size
[B]
No. of
Meters
[C]
Meter
Ratio
[D]
Meter
Maintenance &
Extra Capacity
[E]
Public Fire
Protection
[F]

Customer
[G]
Proposed
Monthly
Charge
[H]
Current
Monthly
Charge
[I]

Difference
($)
[J]

Difference
(%)
[K}
1 All
Customers
2 5 8� '' or 3 4� ’’ 20,139 1.00 $28.30 $4.05 $6.26 $38.62 $26.08 $12.54 48.1% 3 1'' 11,967 1.67 $47.17 $6.75 $6.26 $60.19 $49.55 $10.64 21.5% 4 1 1 2� '' 2,203 3.33 $94.35 $13.50 $6.26 $114.11 $101.71 $12.40 12.2% 5 2'' 1,752 5.33 $150.95 $21.60 $6.26 $178.82 $234.75 ($55.93) -23.8% 6 3'' 257 14.50 $410.41 $58.73 $6.26 $475.40 $573.79 ($98.39) -17.1% 7 4'' 215 25.00 $707.60 $101.26 $6.26 $815.13 $881.50 ($66.37) -7.5% 8 6'' 97 53.33 $1,509.55 $216.02 $6.26 $1,731.84 $1,361.36 $370.48 27.2% 9 8'' 24 93.33 $2,641.71 $378.04 $6.26 $3,026.02 $2,214.32 $811.70 36.7% 10 10'' 4 140.00 $3,962.57 $567.06 $6.26 $4,535.89 $2,881.97 $1,653.92 57.4% 11 Total 36,658 14.5%

CITY OF PASADENA / Water Financial Plan & Rate Study Report 56 4.5. Proposed Private Fire Charges
Table 4-6 shows the derivation of private fire charges. The unit rate per equivalent private fire meter, per year was calculated in Table 3-13. This unit rate is divided by twelve billing periods to get a unit rate per month, per equivalent private fire meter. The resulting rate is multiplied by the fire capacity ratios (normalized to a 6’’ meter) shown in Column D below. This provides the FY 2025 proposed monthly private fire service charge shown in Column E of Table 4-6. We note that the proposed charges are in proportion to potential flow according to guidance in the AWWA rate setting manual.

Table 4-6: Derivation of Private Fire Monthly Fixed Service Charge

Line
[A]

Private Fire
Connections
[B]
No.

Connections
[C]
Potential
Demand per
Connection
[D]

Monthly
Private Fire
Charge
[E]
Monthly
Current
Charge
[F]

Difference ($)
[G]
1 Meter Size
4 4'' 722 38.32 $31.12 $50.71 ($19.59)
5 6'' 394 111.31 $90.40 $94.82 ($4.42)
6 8'' 144 237.21 $192.65 $170.35 $22.30
7 10'' 2 426.58 $346.46 $250.53 $95.93
8 12'' 3 689.04 $559.63 $332.89 $226.74
9 16'' 3 1,468.37 $1,192.58 $332.89 $859.69
10 Total 1,267

4.6. Proposed Variable Rates
The variable rate includes the following cost components: wholesale supply costs, base costs (costs to serve average demand), extra capacity (peaking costs), and conservation. Each component of the variable rate is described and calculated in the sections below.

4.6.1. CUSTOMER CLASSES
As discussed above, the Department currently bills all customers the same tiered rates with tier definitions/widths varying by meter size. The Department has chosen to modify their variable rate structure based on customer classes: Single Family Residential, Multi-Family Residential, and Commercial classes. The Commercial class will include all non-residential classes except for private fire (including Commercial, Industrial, Irrigation, etc.). The Commercial customer class is further divided by meter sizes:

Small (𝟓𝟓 𝟖𝟖� "-1’’), Medium (1 ½’’-4’’), and Large (6’’ & up). The proposed tier definitions, descriptions and derivations of variable rate components, and the calculation of the FY 2025 proposed variable rates are shown in this section.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 57 4.6.2. TIER DEFINITIONS
Tiers were defined for Single Family Residential (“SFR”) customers first. The SFR Tier 1 breakpoint is based on an estimate of indoor water use, determined using an assumption of 42 gallons per person per day and 4 persons per household. The Tier 2 breakpoint was set to the average summer use for SFR customers. Tier 3 represents any use beyond Tier 2. The remaining classes’ tier breakpoints were determined based on the resulting distribution of tiered water use for the SFR customers. For example, the Tier 1 breakpoint resulted in approximately 35% of total SFR water use; Tier 2 represents approximately 44% and Tier 3 the remaining 21%. Raftelis used these percentage distributions to determine the breakpoint of each tier for the two other classes. This promotes equity because each class is paying for the same proportion of water in each tier so that all classes are treated the same and one particular class is not paying for a disproportionate volume at Tier 3 rates. The resulting tier allocations are shown below in Table 4-7. Column C shows the total projected water use for FY 2025 by customer class and tier. All values are in HCF.

Table 4-7: Proposed Tier Breakpoints by Customer Class

Private Fire Connections
[A]
Tier
Breakpoints
[B]
Water Use by
Customer Class/Tier
[C]
Single Family 5,083,771
Tier 1 14 1,802,928
Tier 2 58 2,237,452
Tier 3 >58 1,043,391

Multi-Family 1,883,783
Tier 1 10 1,201,249
Tier 2 20 309,080
Tier 3 >20 373,454

Commercial Small (𝟓𝟓 𝟖𝟖� "-1'') 336,007
Tier 1 17 116,410
Tier 2 87 148,917
Tier 3 >87 70,679

Commercial Medium (1 ½’’-4'') 1,594,737
Tier 1 105 558,320
Tier 2 530 702,802
Tier 3 >530 333,614

Commercial Large (6''+) 1,281,195
Tier 1 1,700 446,161
Tier 2 10,100 563,382
Tier 3 >10,100 271,652
Total 10,179,493

CITY OF PASADENA / Water Financial Plan & Rate Study Report 58 4.6.3. VOLUMETRIC RATE DERIVATION
The total volumetric rate is the summation of unit rates for each cost component: Wholesale Supply, Base (average demand costs), Extra Capacity (peaking costs), and Conservation. Each cost component’s unit rate is defined and calculated below.

4.6.4. WHOLESALE SUPPLY RATES
Table 4-8 derives the supply rates in column G. The Department currently relies on a combination of groundwater from the Raymond Basin and imported water from MWD. The water purchase revenue requirement is shown in column E and is allocated to groundwater and MWD costs in proportion to column D. These percentages provide the basis upon which to allocate the Wholesale Water Purchase Revenue Requirement (from line 12, Column C of Table 3-13) to each supply source. The total revenue requirement for each source is then divided by the total water sales for groundwater and MWD water, respectively, resulting in the unit supply rates listed in Column G. All values are in $/HCF.

Table 4-8: Derivation of Unit Rates for Supply Costs by Source ($/HCF)

Line
[A]

Description
[B]

Wholesale
Water Purchase
Costs
[C]

% of Water
Purchase
Costs
[D]
Wholesale
Water Purchase
Revenue
Requirement
[E]

Water Sales
(after water
loss, in HCF)
[F]

Supply Rate
($/HCF)
[G]
1 $22,552,250
2 3 Groundwater $384,909 1.7% $377,136 4,190,842 $0.09 4 MWD $22,632,182 98.3% $22,175,114 5,988,651 $3.70
5 Total $23,017,091 100.0% $22,552,250 10,179,493

Table 4-9 shows the calculation of the tiered supply rates. Using the tier breakpoints for each customer class, total water use for all customer classes in each tier was calculated in Column C. Because groundwater supply is cheaper and Tier 1 tends to be indoor/essential use, groundwater supply cost is allocated to Tier 1 customers. The supply rate for Tier 1 is shown in column G. The remaining groundwater supply is allocated to Tier 2 until the supply is exhausted; the remaining water for Tier 2 and all of Tier 3 is supplied by MWD water. The resulting water volumes are then multiplied by the unit supply rates for each source in line 8 (from Table 4-8) by the use in each tier. The resulting values are then divided by the total use in each tier (Column F) to yield the tiered supply rates in Column G. All rates and flows are in $/HCF or HCF, respectively.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 59 Table 4-9: Supply Rates Derivation

Line
[A]

Description
[B]
Water Use
(HCF)
[C]

Groundwater
[D]
MWD Imported
Water
[E]

Total
[F]
Supply Rate
($/HCF)
[G]
Revenue
Requirement
[H]
1 Total Water Available 4,190,842 5,988,651 10,179,493 2 3 Tier 1 4,125,068 4,125,068 - 4,125,068 $0.09 $371,217 4 Tier 2 3,961,634 65,774 3,895,860 3,961,634 $3.64 $14,431,730 5 Tier 3 2,092,791 - 2,092,791 2,092,791 $3.70 $7,749,303 6 Total 10,179,493 4,190,842 5,988,651 10,179,493 7 8 Wholesale Supply Cost by
Source $0.09 $3.70 $22,552,250

CITY OF PASADENA / Water Financial Plan & Rate Study Report 60 4.6.5. BASE RATE
The base unit rate was developed previously in line 15, Column D of Table 3-13. Base costs recover the costs associated with transmission, distribution, and other related processes required to meet average demand.

4.6.6. EXTRA CAPACITY (PEAKING) RATE
Table 4-10 shows the calculation of the extra capacity (also known as peaking) rates by customer class and tier. Extra capacity costs are designed to recover the costs associated with maintaining storage, and distribution capacity that meets peak daily maximums. The Max Day Extra Capacity costs shown in Column D were calculated by multiplying the unit daily rate for extra capacity (determined earlier in line 15, Column E of Table 3-13) by the total extra capacity units of service for each customer class and tier (from Column H of Table 3-11). The resulting extra capacity costs by customer class and tier (Column D below) are then divided by the total water demand for each tier in each customer class (Column C). This yields the extra capacity rates by customer class and tier, shown in Column E of Table 4-10.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 61 Table 4-10: Derivation of Extra Capacity Rates
Line
[A]
Description
[B]
Water Use
(HCF)
[C]
Max Day
Costs
[D]
Extra
Capacity
Rate
($/HCF)
[E]
1 Single Family 5,083,771 $1,448,895
2 Tier 1 1,802,928 $310,996 $0.17
3 Tier 2 2,237,452 $667,293 $0.30
4 Tier 3 1,043,391 $470,606 $0.45
5 6 Multi-Family 1,883,783 $368,462
7 Tier 1 1,201,249 $199,894.48 $0.17
8 Tier 2 309,080 $75,196.19 $0.24
9 Tier 3 373,454 $93,371.14 $0.25
10 11 Commercial Small (𝟓𝟓 𝟖𝟖� "-
1'') 336,007 $61,991
12 Tier 1 116,410 $15,762 $0.14
13 Tier 2 148,917 $32,098 $0.22
14 Tier 3 70,679 $14,131 $0.20
15 16 Commercial Medium(1
½''-4'') 1,594,737 $402,844
17 Tier 1 558,320 $100,173 $0.18
18 Tier 2 702,802 $178,549 $0.25
19 Tier 3 333,614 $124,122 $0.37
20 21 Commercial Large(6''+) 1,281,195 $415,627
22 Tier 1 446,161 $87,267 $0.20
23 Tier 2 563,382 $176,279 $0.31
24 Tier 3 271,652 $152,081 $0.56
25 Total 10,179,493 2,697,818

CITY OF PASADENA / Water Financial Plan & Rate Study Report 62 4.6.7. CONSERVATION RATE
Table 4-11 shows the calculation of the conservation rate by customer class and tier. Conservation rates recover costs associated with conservation programs, which are targeted toward higher volume users.

Column C shows the water use by customer class and tier. Column C shows weighted water use to apply in each tier. Using weighted water use accounts for the fact that conservation efforts are largely focused on reducing use in Tier 3 rather than Tiers 1 or 2; by applying a weight of 200% to Tier 3 results in Tier 3 bearing slightly more of conservation costs as compared to what Tier 3 would bear if based in proportion to use. For example, SFR use in Tier 3 is approximately 21%. By weighting Tier 3 conservation use as shown in column D, Tier 3 bears 34% of conservation costs. The weighted percentages are shown in Column D. Lines 1 and 2 of Column F show the calculation of a uniform unit cost before weighting; that is, the total allocation to Conservation from line 12, Column K of Table 3-13 is divided by the resulting total conservation use (line 28, Column D of Table 4-11 below) to yield the $/HCF unit rate for conservation shown in line 2, Column F below. This rate is then multiplied by the (weighted) conservation use (Column D) in each tier to produce the cost of service distribution shown in Column F. The resulting values (Column F) are divided by original use (Column C) to produce the final conservation rates by customer class and tier, shown in Column G.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 63 Table 4-11: Derivation of Conservation Unit Rate

Line
[A]

Description
[B]

Water Use
(HCF)
[C]
Conservation
Weighted
Use
[D]

Conservation
Use (HCF)
[E]

Conservation
Costs
[F]

Conservation
Rate
($/HCF)
[G]
1 $3,754,261
2 $0.31
3 4 Single Family 5,083,771 6,127,162 $1,874,383
5 Tier 1 1,802,928 100% 1,802,928 $551,540 $0.31
6 Tier 2 2,237,452 100% 2,237,452 $684,467 $0.31
7 Tier 3 1,043,391 200% 2,086,782 $638,376 $0.61
8 9 Multi-Family 1,883,783 2,257,237 $690,520
10 Tier 1 1,201,249 100% 1,201,249 $367,479 $0.31
11 Tier 2 309,080 100% 309,080 $94,552 $0.31
12 Tier 3 373,454 200% 746,907 $228,489 $0.61
13 14 Commercial Small
(𝟓𝟓 𝟖𝟖� "-1'') 336,007 406,686 $124,411
15 Tier 1 116,410 100% 116,410 $35,611 $0.31
16 Tier 2 148,917 100% 148,917 $45,556 $0.31
17 Tier 3 70,679 200% 141,359 $43,244 $0.61
18 19 Commercial Medium(1
½’’-4'') 1,594,737 1,928,351 $589,909
20 Tier 1 558,320 100% 558,320 $170,798 $0.31
21 Tier 2 702,802 100% 702,802 $214,997 $0.31
22 Tier 3 333,614 200% 667,229 $204,114 $0.61
23 24 Commercial Large
(6''+) 1,281,195 1,552,847 $475,037
25 Tier 1 446,161 100% 446,161 $136,487 $0.31
26 Tier 2 563,382 100% 563,382 $172,346 $0.31
27 Tier 3 271,652 200% 543,304 $166,204 $0.61
28 Total 10,179,493 12,272,284 $3,754,261 $0.31

CITY OF PASADENA / Water Financial Plan & Rate Study Report 64 4.6.8. FINAL RATE DERIVATION
Table 4-12 shows the final rate derivation by customer class and tier. Proposed rates were calculated by summing the various components (from Table 3-13, Table 4-9, Table 4-10, and Table 4-11) listed in Columns D through G. Proposed variable rates are shown in Column H; current rates and the dollar difference to proposed rates are shown in Columns I and J, respectively. Note that the Department will eliminate its fourth Tier. All values shown below are in $/HCF and reflect the 13% revenue increase for FY 2025 from Table 1-1.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 65 Table 4-12: Final Derivation of Variable Rates by Customer Class/Tier (HCF)

Line
[A]

Description
[B]

Water Use
(HCF)
[C]

Wholesale
Supply Rate
[D]

Base Rate
[E]

Extra
Capacity
Rate
[F]

Conservation
Rate
($/HCF)
[G]

Proposed
Rate
($/HCF)
[H]

Current
Rate
($/HCF)
[I]

Difference
($)
[J]
1 Single Family 5,083,771 6,127,162 $1,874,383 $0.37
2 Tier 1 1,802,928 $0.09 $1.68 $0.17 $0.31 $2.24818 $1.76489 $0.48329 3 Tier 2 2,237,452 $3.64 $1.68 $0.30 $0.31 $5.92680 $3.74827 $2.17853 4 Tier 3 1,043,391 $3.70 $1.68 $0.45 $0.61 $6.44550 $4.39376 $2.05174 5 6 Multi-Family 735,513
7 Tier 1 384,509 $0.09 $1.68 $0.17 $0.31 $2.24209 $1.76489 $0.47720 8 Tier 2 125,898 $3.64 $1.68 $0.24 $0.31 $5.87186 $3.74827 $2.12359 9 Tier 3 225,106 $3.70 $1.68 $0.25 $0.61 $6.24448 $4.39376 $1.85072 10 11 Commercial Small (5 8� "-
1'') 336,007
12 Tier 1 116,410 $0.09 $1.68 $0.14 $0.31 $2.21109 $1.76489 $0.44620 13 Tier 2 148,917 $3.64 $1.68 $0.22 $0.31 $5.84411 $3.74827 $2.09584 14 Tier 3 70,679 $3.70 $1.68 $0.20 $0.61 $6.19440 $4.39376 $1.80064 15 16 Commercial Medium (1
½’’-4'') 1,594,737
17 Tier 1 558,320 $0.09 $1.68 $0.18 $0.31 $2.25510 $1.76489 $0.49021 18 Tier 2 702,802 $3.64 $1.68 $0.25 $0.31 $5.88262 $3.74827 $2.13435 19 Tier 3 333,614 $3.70 $1.68 $0.37 $0.61 $6.36652 $4.39376 $1.97276

CITY OF PASADENA / Water Financial Plan & Rate Study Report 66 Line
[A]

Description
[B]

Water Use
(HCF)
[C]

Wholesale
Supply Rate
[D]

Base Rate
[E]
Extra
Capacity
Rate
[F]
Conservation
Rate
($/HCF)
[G]
Proposed
Rate
($/HCF)
[H]
Current
Rate
($/HCF)
[I]

Difference
($)
[J]
20 Commercial LARGE
(6''+) 1,281,195
21 Tier 1 446,161 $0.09 $1.68 $0.20 $0.31 $2.27128 $1.76489 $0.50639 22 Tier 2 563,382 $3.64 $1.68 $0.31 $0.31 $5.94146 $3.74827 $2.19319 23 Tier 3 271,652 $3.70 $1.68 $0.56 $0.61 $6.55430 $4.39376 $2.16054 24 Total 10,179,493 $22,552,250 $17,099,305 $2,697,818 $3,754,261

CITY OF PASADENA / Water Financial Plan & Rate Study Report 67 5. Proposed Five-Year Rates

5.1. Proposed Fixed Charges
Table 5-1 shows the proposed Fixed Charges by meter size for FY 2025 through FY 2029. All charges are shown in monthly terms. The Fixed Charge is designed to recover the costs associated with installation, maintaining, and servicing a customer’s meter, as well as the customer service costs and a portion of extra capacity costs.

Table 5-1: Monthly Proposed Fixed Charges
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
All Customers
𝟓𝟓 𝟖𝟖� " $38.62 $43.25 $47.15 $50.92 $54.48
𝟑𝟑 𝟒𝟒� " $38.62 $43.25 $47.15 $50.92 $54.48
1" $60.19 $67.41 $73.48 $79.36 $84.91
1 𝟏𝟏 𝟐𝟐� " $114.11 $127.81 $139.31 $150.45 $160.98
2" $178.82 $200.28 $218.31 $235.77 $252.27
3" $475.40 $532.45 $580.37 $626.80 $670.68
4" $815.13 $912.94 $995.11 $1,074.72 $1,149.95
6" $1,731.84 $1,939.66 $2,114.23 $2,283.37 $2,443.20 8" $3,026.02 $3,389.14 $3,694.16 $3,989.70 $4,268.97 10" $4,535.89 $5,080.20 $5,537.42 $5,980.41 $6,399.04

5.2. Proposed Private Fire Charges
Table 5-2 shows the proposed private fire service charges for FY 2025 through FY 2029. Private fire charges recover the costs associated with maintaining private fire-fighting capacity.

Table 5-2: Monthly Proposed Fixed Service Charges
Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Fixed Rates
(All Customers)
4" $31.08 $34.82 $37.95 $40.98 $43.85
6" $90.30 $101.13 $110.23 $119.05 $127.39
8" $192.42 $215.51 $234.91 $253.70 $271.46
10" $346.04 $387.57 $422.45 $456.25 $488.19
12" $558.96 $626.03 $682.38 $736.97 $788.55
16" $1,191.15 $1,334.09 $1,454.16 $1,570.49 $1,680.43

CITY OF PASADENA / Water Financial Plan & Rate Study Report 68 5.3. Proposed Variable Rates
Table 5-2 shows the proposed private fire service charges for FY 2025 through FY 2029. Private fire charges recover the costs associated with maintaining private fire-fighting capacity.

Table 5-3: Proposed Variable Rates ($/HCF) for All Classes Description Tier
Breakpoints FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Single Family
Tier 1 0-7 $2.24818 $2.51796 $2.74458 $2.96414 $3.17163 Tier 2 7-29 $5.92680 $6.63802 $7.23544 $7.81428 $8.36128 Tier 3 >29 $6.44550 $7.21896 $7.86867 $8.49816 $9.09303

Multi-Family Residential
Tier 1 0-5 $2.24209 $2.51114 $2.73714 $2.95611 $3.16304 Tier 2 5-10 $5.87186 $6.57648 $7.16836 $7.74183 $8.28376 Tier 3 >10 $6.24448 $6.99382 $7.62327 $8.23313 $8.80945

Commercial Small (𝟓𝟓 𝟖𝟖� "--1’’)
Tier 1 0-8 $2.21109 $2.47642 $2.69930 $2.91524 $3.11931 Tier 2 8-43 $5.84411 $6.54540 $7.13448 $7.70524 $8.24461 Tier 3 >43 $6.19440 $6.93773 $7.56212 $8.16709 $8.73879

Commercial Medium (1 ½’’-4’’)
Tier 1 0-52 $2.25510 $2.52571 $2.75303 $2.97327 $3.18140 Tier 2 52-265 $5.88262 $6.58853 $7.18150 $7.75602 $8.29894 Tier 3 >265 $6.36652 $7.13050 $7.77224 $8.39402 $8.98160

Commercial Large (6’’ & up)
Tier 1 0-850 $2.27128 $2.54383 $2.77278 $2.99460 $3.20422 Tier 2 850-5,050 $5.94146 $6.65444 $7.25333 $7.83360 $8.38195 Tier 3 >5,050 $6.55430 $7.34082 $8.00149 $8.64161 $9.24652

CITY OF PASADENA / Water Financial Plan & Rate Study Report 69 6. Water Bill Impacts

6.1. Single Family Residential Bill Impacts
Table 6-1 shows Single Family Residential monthly bill impacts for various use points and meter sizes.

Average monthly water use was calculated based on historical data and applied to the variable component of the total charge.

Table 6-1: Single Family Monthly Bill Impacts for FY 2025 Meter Size No.

Accounts
Average
Use Proposed Bill Current
Bill
Difference
($)
Single Family Residential
𝟓𝟓 𝟖𝟖� " 15 19 $69.17 $56.88 $12.29
𝟑𝟑 𝟒𝟒� " 16,880 23 $81.03 $66.62 $14.40
1" 9,738 39 $150.01 $121.46 $28.55
1 𝟏𝟏 𝟐𝟐� " 1,209 83 $340.81 $262.96 $77.85
2" 325 147 $611.77 $501.11 $110.66
3" 4 194 $1,059.83 $862.15 $197.68

6.2. Multi-Family Residential Bill Impacts
Table 6-2 shows the monthly bill impacts for Multi-Family Residential (MFR) customers at various use points and meter sizes. Average monthly water use was calculated based on historical data and applied to the variable component of the total charge.

Table 6-2: Multi-Family Monthly Bill Impacts for FY 2025 Meter Size No.

Accounts No. EDUs Average
Use
Proposed
Bill Current Bill Difference
($)
Multi-Family Residential
𝟓𝟓 𝟖𝟖� " 2 3 39 $98.67 $105.60 ($6.93)
𝟑𝟑 𝟒𝟒� " 2,069 2 34 $102.14 $93.42 $8.72
1" 1,216 4 53 $143.20 $155.57 ($12.37)
1 𝟏𝟏 𝟐𝟐� " 490 7 93 $260.11 $287.32 ($27.21)
2" 563 20 168 $367.16 $552.27 ($185.11)
3" 92 36 343 $859.92 $1,187.45 ($327.53)
4" 47 46 424 $1,290.45 $1,503.53 ($213.08)
6" 24 127 1,076 $2,292.36 $2,105.59 $186.77

6.3. Commercial Bill Impacts
Table 6-3 shows the monthly bill impacts for Commercial customers at various use points and meter sizes.

Average monthly water use was calculated based on historical data and applied to the variable component of the total charge.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 70 Table 6-3: Commercial Small Monthly Bill Impacts for FY 2025 Meter Size No.

Accounts
Average
Use Proposed Bill Current
Bill
Difference
($)
Commercial Small (𝟓𝟓 𝟖𝟖� "--1’’)
𝟓𝟓 𝟖𝟖� " 5 7 $46.36 $36.57 $9.79
𝟑𝟑 𝟒𝟒� " 1,150 22 $72.02 $64.19 $7.83
1" 902 38 $140.35 $119.02 $21.32

Table 6-4 shows the monthly bill impacts for Commercial customers at various use points and meter sizes.

Average monthly water use was calculated based on historical data and applied to the variable component of the total charge.

Table 6-4: Commercial Medium Monthly Bill Impacts for FY 2025 Meter Size No.

Accounts
Average
Use Proposed Bill Current
Bill
Difference
($)
Commercial Medium (1 ½’’-4’’)
1 𝟏𝟏 𝟐𝟐� " 466 79 $203.19 $253.21 ($50.02)
2" 787 151 $432.51 $510.86 ($78.34)
3" 140 293 $1,146.76 $1,065.64 $81.12
4" 156 497 $2,086.51 $1,655.59 $430.92

Table 6-5 shows the monthly bill impacts for Commercial customers at various meter sizes with average water use. Average monthly water use was calculated based on historical data and applied to the variable component of the total charge.

Table 6-5: Commercial Large Monthly Bill Impacts for FY 2025 Meter Size No.

Accounts
Average
Use Proposed Bill Current
Bill
Difference
($)
Commercial Large (6’’ & up)
6" 59 2,236 $5,254.74 $5,838.91 ($584.18)
8" 22 1,409 $4,626.13 $4,684.65 ($58.52)
10" 2 12,784 $40,216.49 $33,072.29 $7,144.20

CITY OF PASADENA / Water Financial Plan & Rate Study Report 71 7. Proposed Drought Rates

7.1. Drought Rate Background
The proposed rates include the adoption of d rought rates which may be implemented during a declared water supply shortage response. This section provides an overview of the water shortage emergency stages (drought stages), corresponding revenue impacts, dr ought rate calculations, and a summary of proposed consumption charges at each stage (effective only if a water supply shortage is declared by City Council and the General Manager decides to implement drought rates). The drought rates calculated in this section are separate rates in addition to the water rates derived in Section 5.

The proposed drought rates are volumetric ($/HCF). The percent reduction in water demand during each water shortage emergency stage is defined in the Department’s Water Shorta ge Contingency Plan, which was approved by the City Council as a part of the 2020 Urban Water Management Plan (UWMP) and Municipal Code 13.10.035. The Department can establish drought rates to:

• Encourage water conservation through price signaling to meet the desired conservation goals for each tier, at each drought stage
• Recover lost revenue due to decreased consumption during a drought The Department is subject to penalties from MWD should it exceed its water allocation. In addition, the Department may be subject to penalties from the State Water Resources Control Board if it does not reach future mandated water use reductions. Drought Rates are designed to promote conservation and maximize the probability that the Department will escape penalties. Drought Rates are needed to recover lost revenues as Department customers curtail their water consumption.

7.1.1. REVENUE COLLECTION DURING A DROUGHT
Water shortage emergencies can have significant impacts on an agency’s revenue. During a drought, the Department’s revenue requirement (costs) decreases along with revenue. However, the Department’s revenue decreases more than its costs do. In addition, the majority of the Department’s costs are fixed (salaries, benefits, debt service, etc.), and do not decrease with lower water use levels. The proposed Drought Rates are an option to recover lost revenue to cover its fixed costs . Drought rates are a mechanism to maintain revenue stability and achieve debt coverage requirements during a water shortage emergency.

7.1.2. CUSTOMER BILLS DURING A DROUGHT
Provided that customers cut back their water use in line with the drought cutback goal, their total water bill should be equal to or lower than their bill during “normal” water/rainfall years. Conversely, those that do not cut back consumption will face higher charges.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 72 7.2. Derivation of Drought Rates
To calculate drought rates, Raftelis performed the following steps:

1. Determine target reductions for water use at each stage in the drought

2. Determine the lost revenue at each stage of reduction

3. Account for volumetric water supply cost savings (lower water purchase costs) to offset a portion of the revenue loss

4. Add additional conservation costs at each stage of drought, as applicable

5. Calculate the total revenue shortfall to be recovered via drought rates by summing total revenue losses and conservation costs, then offsetting (e.g., subtracting) decreases in volumetric supply costs

6. Calculate the % increase in revenue needed by dividing the total drought revenue requirement by expected (e.g. no drought) revenue.

7. Adjust % rate increase for each tier/class until the target revenue increase is achieved. That is, instead of applying universal % increase, the Department chose to concentrate increases in upper tiers where excessive water use typically falls and towards whom most conservation efforts are directed.

8. Apply the percentages developed in step 7 to the proposed variable rates.

Table 7-1 shows the estimated water use reductions for each customer class at each level and stage of drought.

Table 7-1: Target Reduction at Each Stage of Drought, By Customer Class/Tier Pasadena Drought
Level Level 1 Level 2 Level
3 Level 4
Line Description UWMP
Level Baseline Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Residential Single
Family
2 Tier 1 0% 0% 0% 7% 10% 20% 42%
3 Tier 2 0% 18% 32% 45% 58% 65% 75%
4 Tier 3 0% 27% 65% 80% 95% 100% 100%
5 6 Residential Multi-
Family
7 Tier 1 0% 0% 0% 7% 10% 20% 42%
8 Tier 2 0% 18% 32% 45% 58% 65% 75%
9 Tier 3 0% 27% 65% 80% 95% 100% 100%
10 11 Commercial
12 Tier 1 0% 0% 0% 0% 0% 0% 0%
13 Tier 2 0% 5% 10% 20% 40% 50% 60%
14 Tier 3 0% 10% 20% 40% 60% 100% 100%
15 16 Target Reduction
(Up to) 10% 20% 30% 40% 50% > 50%
17 Total Reduction
(%) 10% 20% 30% 40% 50% 60%

CITY OF PASADENA / Water Financial Plan & Rate Study Report 73 CITY OF PASADENA / Water Financial Plan & Rate Study Report 74 Table 7-2 shows the calculation of estimated water use at each stage in the drought. Water use at each stage and tier was calculated by multiplying non-drought use by the percentage reduction shown for that stage/tier, then subtracting the result from the non-drought use. These reduced water use estimates provide the basis upon which to calculate estimated lost revenue at each drought stage.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 75 Table 7-2: Estimated Water Use (HCF) at Each Stage of Drought, By Customer Class/Tier Pasadena Drought Level Baseline Level 1 Level 2 Level 3 Level 4 Line Description/UWMP Level Baseline Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Residential Single Family 5,083,771 4,399,314 3,689,582 3,116,000 2,625,722 2,225,450 1,605,061 2 Tier 1 1,802,928 1,802,928 1,802,928 1,676,723 1,622,635 1,442,342 1,045,698 3 Tier 2 2,237,452 1,834,711 1,521,467 1,230,599 950,917 783,108 559,363 4 Tier 3 1,043,391 761,676 365,187 208,678 52,170 0 0
5 6 Residential Multi-Family 1,883,783 1,727,316 1,542,133 1,361,847 1,231,156 1,069,178 773,995 7 Tier 1 1,201,249 1,201,249 1,201,249 1,117,162 1,081,125 961,000 696,725 8 Tier 2 309,080 253,446 210,174 169,994 131,359 108,178 77,270 9 Tier 3 373,454 272,621 130,709 74,691 18,673 0 0
10 11 Commercial Small (𝟓𝟓 𝟖𝟖� "-1’’) 336,007 321,493 306,979 277,952 234,032 190,869 175,977 12 Tier 1 116,410 116,410 116,410 116,410 116,410 116,410 116,410 13 Tier 2 148,917 141,471 134,026 119,134 89,350 74,459 59,567 14 Tier 3 70,679 63,612 56,544 42,408 28,272 0 0
15 16 Commercial Medium (1 ½’’ -
4’’) 1,594,737 1,526,235 1,457,733 1,320,730 1,113,447 909,721 839,441 17 Tier 1 558,320 558,320 558,320 558,320 558,320 558,320 558,320 18 Tier 2 702,802 667,662 632,522 562,242 421,681 351,401 281,121 19 Tier 3 333,614 300,253 266,891 200,169 133,446 0 0
20 21 Commercial Large (6’’ & up) 1,281,195 1,225,861 1,170,527 1,059,858 892,851 727,852 671,514 22 Tier 1 446,161 446,161 446,161 446,161 446,161 446,161 446,161 23 Tier 2 563,382 535,213 507,044 450,706 338,029 281,691 225,353 24 Tier 3 271,652 244,487 217,322 162,991 108,661 0 0
25 Total Water Use (HCF) 10,179,493 9,200,219 8,166,954 7,136,387 6,097,208 5,123,070 4,065,988 26 Overall % Reduction 10% 20% 30% 40% 50% 60%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 76 Table 7-3 shows the total estimated revenues from reduced water use at proposed rates at each drought stage.

The estimated revenue in each tier and customer class was estimated by taking the water use from CITY OF PASADENA / Water Financial Plan & Rate Study Report 77 Table 7-2 and multiplying by the water rates shown in the third column listed below. The total revenue loss by stage is shown in line 36 and was calculated by subtracting baseline water use from the estimated total water use at each drought stage.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 78 Table 7-3: Estimated Revenues at Each Stage of Drought, By Customer Class/Tier Pasadena Drought Level Baseline Level 1 Level 2 Level 3 Level 4 Line Description/UWMP Level Water
Rates Baseline Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Residential Single Family $24,039,422 $19,836,655 $15,424,555 $12,408,125 $9,620,132 $7,883,972 $5,666,151 2 Tier 1 $2.25 $4,053,303 $4,053,303 $4,053,303 $3,769,572 $3,647,973 $3,242,643 $2,350,916 3 Tier 2 $5.93 $13,260,941 $10,873,972 $9,017,440 $7,293,518 $5,635,900 $4,641,329 $3,315,235 4 Tier 3 $6.45 $6,725,177 $4,909,379 $2,353,812 $1,345,035 $336,259 $0 $0 5 6 Residential Multi-Family $6,840,208 $5,883,884 $4,743,632 $3,969,363 $3,311,900 $2,789,853 $2,015,837 7 Tier 1 $2.24 $2,693,308 $2,693,308 $2,693,308 $2,504,777 $2,423,978 $2,154,647 $1,562,119 8 Tier 2 $5.87 $1,814,874 $1,488,197 $1,234,114 $998,181 $771,321 $635,206 $453,719 9 Tier 3 $6.24 $2,332,025 $1,702,378 $816,209 $466,405 $116,601 $0 $0 10 11 Commercial Small (𝟓𝟓 𝟖𝟖� "-1’’) $1,565,498 $1,478,202 $1,390,906 $1,216,314 $954,693 $692,537 $605,508 12 Tier 1 $2.21 $257,393 $257,393 $257,393 $257,393 $257,393 $257,393 $257,393 13 Tier 2 $5.84 $870,288 $826,774 $783,259 $696,231 $522,173 $435,144 $348,115 14 Tier 3 $6.19 $437,817 $394,035 $350,254 $262,690 $175,127 $0 $0 15 16 Commercial Medium (1 ½’’ to
4’’) $7,517,348 $7,098,236 $6,679,124 $5,840,900 $4,589,244 $3,326,228 $2,912,796 17 Tier 1 $2.26 $1,259,068 $1,259,068 $1,259,068 $1,259,068 $1,259,068 $1,259,068 $1,259,068 18 Tier 2 $5.88 $4,134,319 $3,927,603 $3,720,887 $3,307,455 $2,480,592 $2,067,160 $1,653,728 19 Tier 3 $6.37 $2,123,961 $1,911,565 $1,699,169 $1,274,377 $849,584 $0 $0 20 21 Commercial Large (6’’ & up) $6,141,158 $5,795,743 $5,450,329 $4,759,500 $3,733,940 $2,687,013 $2,352,282 22 Tier 1 $2.27 $1,013,357 $1,013,357 $1,013,357 $1,013,357 $1,013,357 $1,013,357 $1,013,357 23 Tier 2 $5.94 $3,347,313 $3,179,947 $3,012,581 $2,677,850 $2,008,388 $1,673,656 $1,338,925 24 Tier 3 $6.55 $1,780,488 $1,602,439 $1,424,391 $1,068,293 $712,195 $0 $0 25 Total Variable Revenues $46,103,634 $40,092,720 $33,688,546 $28,194,202 $22,209,909 $17,379,603 $13,552,575 26 Total Revenue Losses ($) ($6,010,914) ($12,415,088) ($17,909,432) ($23,893,725) ($28,724,031) ($32,551,059) 27 Total Revenue Losses (%) 13% 27% 39% 52% 62% 71%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 79 Table 7-4 shows the calculation of the drought rate revenue requirement at each drought stage. Lines 3 shows the FY 2025 wholesale water supply costs, which may decrease due to reduced water use during a drought.

The supply cost from line 3 is then multiplied by the total anticipated reduction at each drought stage (calculated above i
CITY OF PASADENA / Water Financial Plan & Rate Study Report 80 Table 7-2). The total supply cost in absence of drought (line 5) is then subtracted from the reduced volumetric water costs at each drought stage (line 9) to produce the estimated drought savings, due to lower water purchased costs, in line 10. Line 14 of Table 7-4 shows the revenue shortfall which is the sum of lost revenue (line 12) and water purchase savings (line 13). Line 14 is added to the expected revenues from Table 7-3 to produce the total drought rate revenue requirement shown in line 17.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 81 Table 7-4: Calculation of Drought Rate Revenue Requirement at Each Stage Pasadena Drought Level Baseline Level 1 Level 2 Level 3 Level 4 Line Water Supply Mix Baseline Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 MWD Volumetric Water Purchases $19,815,219
2 Groundwater Costs $0
3 Subtotal Variable Costs $19,815,219
4 5 Supply Cost (No Drought) $19,815,219 $19,815,219 $19,815,219 $19,815,219 $19,815,219 $19,815,219 $19,815,219 6 Cutback (%), actual
- 10% 20% 30% 40% 50% 60%
7 Total Volumetric Drought Savings $0 $1,906,236 $3,917,572 $5,923,656 $7,946,502 $9,842,742 $11,900,440 8 Total Volumetric Supply Costs $19,815,219 $17,908,982 $15,897,647 $13,891,562 $11,868,717 $9,972,476 $7,914,779 9 10 Decrease in Volumetric Supply
Costs ($1,906,236) ($3,917,572) ($5,923,656) ($7,946,502) ($9,842,742) ($11,900,440) 11 12 Volumetric Rate Revenue Losses $6,010,914 $12,415,088 $17,909,432 $23,893,725 $28,724,031 $32,551,059 13 Decrease in Volumetric Supply Cost ($1,906,236) ($3,917,572) ($5,923,656) ($7,946,502) ($9,842,742) ($11,900,440) 14 Total Revenue Shortfall To be
Recovered Via Drought Rates $4,104,678 $8,497,516 $11,985,776 $15,947,223 $18,881,289 $20,650,619 15 Expected Revenue $40,092,720 $33,688,546 $28,194,202 $22,209,909 $17,379,603 $13,552,575 16 17 Total Drought Revenue
Requirement $44,197,397 $42,186,062 $40,179,977 $38,157,132 $36,260,892 $34,203,194

CITY OF PASADENA / Water Financial Plan & Rate Study Report 82 Table 7-5 shows the percentage rate increases by customer class and tier to recover the drought revenue requirement shown in line of Table 7-4. The percentage rate increases in the early drought stages reflect that most conservation will come from Tiers 2 and 3. These percentages are the percentage increase to the non- drought rate at each drought stage. For example, during a Stage 2 drought, the non-drought rates for Tier 2, would increase by 29%.

Table 7-5: Drought Percentage Increases By Customer Class/Tier Pasadena Drought
Level Level 1 Level 2 Level 3 Level 4
Line Description/UWMP
Level Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6
1 Residential Single
Family
2 Tier 1 0% 0% 10% 35% 58% 125%
3 Tier 2 11% 29% 52% 89% 152% 178%
4 Tier 3 17% 51% 77% 127% 175% 225%
5 6 Residential Multi-
Family
7 Tier 1 0% 0% 10% 35% 58% 125%
8 Tier 2 11% 29% 52% 89% 152% 178%
9 Tier 3 17% 51% 77% 127% 175% 225%
10 11 Commercial Small
(𝟓𝟓 𝟖𝟖� "-1’’)
12 Tier 1 0% 0% 10% 35% 58% 125%
13 Tier 2 11% 29% 52% 89% 152% 178%
14 Tier 3 17% 51% 77% 127% 175% 225%
15 16 Commercial Medium
(1 ½’’-4’’)
17 Tier 1 0% 0% 10% 35% 58% 125%
18 Tier 2 11% 29% 52% 89% 152% 178%
19 Tier 3 17% 51% 77% 127% 175% 225%
20 21 Commercial Large (6’’
& up)
22 Tier 1 0% 0% 10% 35% 58% 125%
23 Tier 2 11% 29% 52% 89% 152% 178%
24 Tier 3 17% 51% 77% 127% 175% 225%

CITY OF PASADENA / Water Financial Plan & Rate Study Report 83 Table 7-6 shows the FY 2025 proposed drought rates by customer class/tier at each drought stage. The rates shown below were calculated by applying the percentages shown above in Table 7-5 by the baseline rates in Table 7-6 below. All rates are shown in $/HCF. The percentages shown in Table 7-4 can be applied to the rates for each of the five years derived in this report. FY 2025 is shown below as an example.

Table 7-6: FY 2025 Proposed Drought Rates by Customer Class/Tier ($/HCF) Pasadena Drought
Level Baseline Level 1 Level 2 Level 3 Level 4
Line Description/UWMP
Level Baseline Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 1 Residential Single
Family
2 Tier 1 $2.25 $2.25 $2.25 $2.47 $3.04 $3.55 $5.06
3 Tier 2 $5.93 $6.58 $7.62 $8.98 $11.20 $14.94 $16.48
4 Tier 3 $6.45 $7.55 $9.73 $11.41 $14.63 $17.73 $20.95
5 6 Residential Multi-
Family
7 Tier 1 $2.24 $2.24 $2.24 $2.47 $3.03 $3.54 $5.04
8 Tier 2 $5.87 $6.52 $7.55 $8.90 $11.10 $14.80 $16.32
9 Tier 3 $6.24 $7.32 $9.43 $11.05 $14.17 $17.17 $20.29
10 21 Commercial Small
(𝟓𝟓 𝟖𝟖� "-1’’)
22 Tier 1 $2.21 $2.21 $2.21 $2.43 $2.98 $3.49 $4.97
30 Tier 2 $5.84 $6.49 $7.51 $8.85 $11.05 $14.73 $16.25
31 Tier 3 $6.19 $7.26 $9.35 $10.96 $14.06 $17.03 $20.13 32 33 Commercial Medium
(1 ½’’-4’’)
34 Tier 1 $2.26 $2.26 $2.48 $3.04 $3.56 $5.07 $2.26
35 Tier 2 $6.53 $7.56 $8.91 $11.12 $14.82 $16.35 $6.53
36 Tier 3 $7.46 $9.61 $11.27 $14.45 $17.51 $20.69 $7.46 37 38 Commercial Large (6’’
& up)
39 Tier 1 $2.27 $2.27 $2.50 $3.07 $3.59 $5.11 $2.27
40 Tier 2 $6.60 $7.63 $9.00 $11.23 $14.97 $16.52 $6.60
41 Tier 3 $7.68 $9.90 $11.60 $14.88 $18.02 $21.30 $7.68

CITY OF PASADENA / Water Financial Plan & Rate Study Report 84 7.2.1. DROUGHT RATE ADOPTION
The Council could adopt the drought rates separately from any other type of rate increase. For the duration of the Study period (5 years), the Council would have the ability to implement drought rates by increasing the then-current variable rate without ha ving to re -issue the Proposition 218 notice as long as drought rates are noticed in the Public Hearing notice.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 85 8. Rate Comparisons
The Department conducted a rate survey to benchmark current and proposed water rates against seven neighboring water providers. While a useful benchmark, it is worth noting that such comparisons only paint a partial picture since many factors, such as wate r sources, age and replacement of infrastructure, service area characteristics, revenue sources, and other local conditions, affect the total cost of providing water services.

Figure 8-1 shows a monthly
14 water bill comparison for the current (2024) and proposed (2025) rates against seven neighboring agencies. The survey assumes a single -family residential customer using 11 HCF of water per month, with a ¾” metered connection. This survey was conducted in January 2024 and should only be used as a reference point or as a snapshot in time.

Figure 8-1: Monthly Bill Comparisons for Neighboring Agencies

14 Agencies with a bi-monthly billing cycle are adjusted to a monthly billing cycle by dividing fixed charges and tier widths in half.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 86 APPENDIX A:

O&M Functionalization

CITY OF PASADENA / Water Financial Plan & Rate Study Report 87 Table 8-1: Allocation of General Manager O&M Costs to Functional Components

General Manager FY 2025 Cost Supply Pumpi
ng
Transm
ission
&
Distrib
ution
Treatm
ent
Customer
Service
Meter
Maintenanc
e
Public
Fire
Protection
General Conservat
ion
Regular Pay - PERS $356,973 100%
Non Benefit Employees $101,239 100%
Overtime Pay $1,501 100%
Personal Development
Allowance $1,504
100%

Workers Comp $20,792 100%
General Liability $3,681 100%
Miscellaneous Pay $6,339 100%
City Portion - PERS $138,211 100%
Life Insurance $202 100%
Dental Insurance $3,981 100%
Medicare City Contribution $6,676 100%
Long Term Disability $214 100%
Medical $61,801 100%
Benefits $89,244 100%
Benefits Admin $3,177 100%
Cell Phone $1,043 100%
EE Parking $674 100%
Services & Supplies $604,368 100%
Internal Service Charge $114,607 100%
Subtotal General Manager $1,516,225
CITY OF PASADENA / Water Financial Plan & Rate Study Report 88 Table 8-2: Allocation of Finance & Admin O&M Costs to Functional Components Finance & Administration FY 2025 Cost Supply Pumpi
ng
Transm
ission
&
Distrib
ution
Treatm
ent
Customer
Service
Meter
Maintenanc
e
Public
Fire
Protection
General Conservat
ion
Personnel
Regular Pay - PERS $1,460,086 100%
Overtime Pay $18,524 100%
PST - Part Time Employees-
PARS $63,988
100%

Auto Allowance $2,608 100%
Personal Development
Allowance $6,177
100%

Workers Comp $75,525 100%
General Liability $13,371 100%
Miscellaneous Pay $60,912 100%
City Portion - PERS $551,445 100%
Life Insurance $744 100%
Dental Insurance $16,480 100%
Medicare City Contribution $24,712 100%
Long Term Disability $894 100%
Medical $264,505 100%
Benefits $365,024 100%
Benefits Admin $11,542 100%
Cell Phone $3,825 100%
EE Parking $782 100%
Subtotal $2,941,144 100%
Services & Supplies 100%
Materials and Supplies ($134,975) 100%
Uniforms $1,589 100%
Rent $182,919 100%
Equipment Lease $9,050 100%
Computer Related $7,477 100%
Equipment under 10000 $25,204 100%
Outside Printing $106 100%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 89 Legal and Other $792 100%
Photo Copy Machine Maint $18,550 100%
Other Contract Services $66,075 100%
Consultant Services $661,013 100%
Contract Maintenance $408,539 100%
Outside Legal $18,020 100%
Dues and Memberships $297 100%
Conf & Mtgs - City Depts $29,828 100%
Mileage $408 100%
Training $27,278 100%
Reference Materials
Subscriptions $1,484
100%

Telephone $12,293 100%
Postage $276 100%
Taxes Payroll $41,340 100%
Fiscal Agent Bank Fees $583,000 100%
Cash Over and Short $53 100%
Insurance $478,541 100%
Material Overhead ($613,970) 100%
Program Expenditures $305,959 100%
Self-Insured Retention $4,495 100%
Permits and Fees $2,093 100%
Overtime Meals $186 100%
Vehcile Rental $398 100%
Advertising $297 100%
Software $2,597 100%
Capital Outlay 100%
Automotive Equipment $51,611 100%
IS-Structural Maintenance $166,253 100%
IS-Tenant Improvements $4,835 100%
IS-Lockshop $0 100%
IS-Utilities & Insurance-Hsekp $70,819 100%
IS-Houskeeping Services $49,035 100%
IS-Printing $5,724 100%
IS-DoIt Telephone Basic $7,559 100%
IS-DoIt Service Center Basic $16,723 100%
IS-DoIt Radio Basic $3,324 100%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 90 IS-Auto Body Repair $742 100%
IS-Fleet Maint-Equip Maintenan $4,823 100%
IS-Fleet Maint-Fuel $445 100%
IS-DoIt NetworkSupportBasic $14,396 100%
IS-Building Preventive Mainten $22,107 100%
IS-DoIt Telephone Usage $2,748 100%
IS-DoIt Entrprs ComputingBasic $30,354 100%
IS-DoIt Applications Basic $23,421 100%
IS-DoIt Program Mgmt Basic $4,088 100%
IS-DoIt GIS Basic $17,767 100%
IS-DoIt Desktop Rplcmnt Prog $5,575 100%
CAP Allocation Expense $188,952 100%
Transfer to General Fund $1,636,786 100%
Warehouse Store Issues $2,953 100%
Equipment Cleaning ($614,800) 100%
Inventory Obsolescence $26,500 100%
Subtotal Finance & Admin $6,825,093
CITY OF PASADENA / Water Financial Plan & Rate Study Report 91 Table 8-3: Allocation of Customer Service O&M Costs to Functional Components Customer Service FY 2025 Cost Supply Pumpi
ng
Transm
ission
&
Distrib
ution
Treatm
ent
Customer
Service
Meter
Maintenanc
e
Public
Fire
Protection
General Conservat
ion
Personnel
Regular Pay - PERS $849,628 100%
Overtime Pay $25,613 100%
Auto Allowance $1,304 100%
Personal Development
Allowance $1,234 100%
Workers Comp $73,952 100%
General Liability $13,092 100%
Miscellaneous Pay $1,279 100%
City Portion - PERS $333,752 100%
Life Insurance $649 100%
Dental Insurance $14,785 100%
Medicare City Contribution $16,298 100%
Long Term Disability $524 100%
Medical $259,444 100%
Benefits $212,410 100%
Benefits Admin $11,301 100%
Cell Phone $348 100%
EE Parking $1,108 100%
Subtotal - Personnnel $1,816,723
Materials and Supplies
Materials And Supplies $4,570 89% 11%
Uniforms $1,853 100%
Rent Expense $146,699 100%
Equip Purchases Under $10000 $2,631 100%
Other Contract Services $11,659 16% 84%
Contract Maintenance $236,067 100%
Training Costs $15,900 100%
Postage $15,593 42% 58%
Cash Over and Short $53 100%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 92 Self-Insured Retention $4,401 100%
Internal Service Charge
IS-Structural Maintenance $1,206 100%
IS-Tenant Improvements $1,590 100%
IS-Utilities & Insurance-Hsekp $514 100%
IS-Houskeeping Services $590 100%
IS-Printing $8,122 100%
IS-DoIt Telephone Basic $10,176 100%
IS-DoIt Service Center Basic $18,644 100%
IS-DoIt Radio Basic $5,698 100%
IS-Fleet Maint-Equip Maint. $14,736 100%
IS-Fleet Maint-Fuel $6,278 100%
IS-DoIt NetworkSupportBasic $16,052 100%
IS-Building Preventive Mainten $160 100%
IS-DoIt Telephone Usage $3,698 100%
IS-DoIt Entrprs ComputingBasic $33,838 100%
IS-Mail Direct Request $12,974 100%
IS-DoIt Applications Basic $26,114 100%
IS-DoIt Program Mgmt Basic $4,557 100%
IS-DoIt GIS Basic $19,810 100%
IS-Security Srvcs at CityHall $250 100%
IS-DoIt Desktop Rplcmnt Prog $6,215 100%
CAP Allocation Expense $235,632 100%
Warehouse Store Issues $718 100%
Equipment Usage $31,731 100%
Bad Debt Expense $848,000 100%
Subtotal Customer Service $3,563,452
CITY OF PASADENA / Water Financial Plan & Rate Study Report 93 Table 8-4: Allocation of Water Delivery O&M Costs to Functional Components Water Delivery FY 2025 Cost Supply Pumping
Transm
ission
&
Distrib
ution
Treatm
ent
Customer
Service
Meter
Mainten
ance
Public Fire
Protection General Conservat
ion
Personnel
Regular Pay - PERS $5,189,113 12% 8% 42% 21% 1% 11% 6% Overtime Pay $924,255 5% 12% 32% 22% 29% Auto Allowance $3,726 100%
Personal Devlpmnt Allowance $15,463 13% 9% 41% 23% 9% 5% Workers' Compensation $287,715 9% 6% 46% 21% 1% 10% 6% General Liability $50,936 9% 6% 46% 21% 1% 10% 6% Miscellaneous Pay $615,149 2% 60% 12% 15% 12% City Portion-PERS $2,039,677 12% 8% 42% 21% 1% 11% 6% Life Insurance $2,731 8% 7% 43% 22% 1% 13% 6% Dental Insurance $57,449 8% 6% 45% 24% 2% 9% 6% Medicare City Contribution $86,865 11% 8% 42% 22% 1% 10% 6% Long Term Disability $3,091 10% 8% 36% 21% 1% 15% 9% Medical $1,061,862 8% 6% 46% 21% 1% 10% 6% Benefits $1,297,288 12% 8% 42% 21% 1% 11% 6% Benefits Admin. $43,969 9% 6% 46% 21% 1% 10% 6% CellPhone/SmartPhone Stipend $5,862 12% 49% 9% 12% 17% Service and Supplies $11,685,151 100%
Materials And Supplies $727,690 1% 4% 33% 54% 8% Uniforms $15,370 100%
Rent Expense $545,226 100%
Computer Related Supplies $10,600 100%
Equip Purchases Under $10000 $42,400 38% 38% 25% Legal and Other Advertising $4,770 100%
Other Contract Services $1,987,076 8% 2% 24% 41% 11% 14% Consultant Services $249,100 5% 3% 39% 53% Contract Maintenance $84,800 1% 99%
Outside Legal Services $901,000 100%
Support To Advisory
Committees $12,720 100%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 94 Dues And Memberships $60,643 91% 9% Special Civic Events $5,300 100%
Conf & Mtgs-City Departments $16,430 97% 3%
Mileage $848 100%
Education $1,060 100%
Training Costs $41,870 15% 72% 13% Video Productions $26,500 100%
Reference Matls Subscriptions $89 100%
Water $22,559,601 100%
Imported Water: MWD $19,815,219 100%
MWD: Readiness-to-Serve
Charge (Fixed) $1,829,274 100%

MWD: Capacity Charge (Fixed) $530,200 100%
Groundwater Costs $384,909 100%
Telephone $14,840 100%
Electric $3,198,365 100%
Postage $37,630 90% 10%
Fiscal Agent/Bank Fees & Chgs $17,111 100%
Utility Rebates $374,095 100%
Program Expenditures $282,909 100%
Self-Insured Retention $17,123 9% 6% 46% 21% 1% 10% 6% Permits and Fees $204,686 100%
Overtime Meals $4,770 96% 4%
Direct Installation Rebates $901,000 100%
Vehicle Rental $11,207 2% 16% 25% 56% Software $1,590 100%
Capital Outlay $9,798,818
Equipment $200,550 100%
Automotive Equipment $1,155,000 100%
Internal Service Charge
IS-Structural Maintenance $147,484 100%
IS-Tenant Improvements $3,640 100%
IS-Lockshop $520 100%
IS-Utilities & Insurance-Hsekp $62,823 100%
IS-Houskeeping Services $72,161 100%
IS-Printing $57,512 9% 90%
IS-DoIt Telephone Basic $35,860 17% 83%
CITY OF PASADENA / Water Financial Plan & Rate Study Report 95 IS-DoIt Service Center Basic $71,862 10% 7% 47% 20% 1% 9% 6% IS-DoIt Radio Basic $43,924 88% 12%
IS-Fleet Maint-Equip Maintenan $629,200 99% 1%
IS-Fleet Maint-Fuel $200,720 98% 2%
IS-DoIt NetworkSupportBasic $61,860 10% 7% 47% 20% 1% 9% 6% IS-Building Preventive Mainten $19,611 100%
IS-DoIt Telephone Usage $13,031 17% 83%
IS-DoIt Entrprs ComputingBasic $130,435 10% 7% 47% 20% 1% 9% 6% IS-Mail Direct Request $312 100%
IS-DoIt Applications Basic $100,638 10% 7% 47% 20% 1% 9% 6% IS-DoIt Program Mgmt Basic $17,571 10% 7% 47% 20% 1% 9% 6% IS-DoIt GIS Basic $76,348 10% 7% 47% 20% 1% 9% 6% IS-DoIt Desktop Rplcmnt Prog $23,961 10% 7% 47% 20% 1% 9% 6% IS-Compressed Natural Gas $19,968 100%
CAP Allocation Expense $2,139,462 100%
Operating Transfer Out $3,928,905
Transfers to General Fund-
HOC $371,000 100%
Warehouse Store Issues $922,200 100%
Equipment Use $180,200 100%
Subtotal $50,801,424
CITY OF PASADENA / Water Financial Plan & Rate Study Report 96 APPENDIX B:

Max Day Peaking Factor
Derivation

CITY OF PASADENA / Water Financial Plan & Rate Study Report 97 Table 8-5 shows the derivation of the FY 2025 Max Bi-Month and Max Day peaking factors.

Five-year max bi-monthly usage (e.g., the highest bi-monthly usage for each customer class over the five year period of billing data, from FY 2018-2022), is shown in column C. Five-year average bi-monthly use (e.g., the average of bi-monthly water use from FY 2018-2022) is shown in column D. Bi-monthly peaking factors are then calculated by taking the max bi-monthly usage in column and dividing by the average bi-monthly use in column D,. The resulting bi-monthly peaking factors are shown in column E. These values are then multiplied by the Max Day conversion factor of 1.50 in Column F (derived earlier in Section 3) to yield the Max Day peaking factor values shown in Column G. These provide the basis for Max Day extra capacity allocations and other related cost of service components.

CITY OF PASADENA / Water Financial Plan & Rate Study Report 98 Table 8-5: Derivation of FY 2025 Peaking Factors by Customer Class

15 FY 2018 through 2022.

Line
[A]

Customer Class
[B]

Max Bi-
Monthly Use,
Five-Year15
[C]

Average Bi-
Monthly
Use, Five-
Year
[D]

Bi-
Monthly
Peaking
Factor
[E]

Max Month to
Day
Conversion
Factor
[F]

Max Day
Peaking
Factor,
= E*F
[G]
1 Single Family 6,410,821 4,837,209 1.33 1.50 1.99
2 Tier 1 1,828,977 1,716,693 1.07 1.50 1.60
3 Tier 2 2,887,169 2,129,063 1.36 1.50 2.03
4 Tier 3 1,694,675 991,454 1.71 1.50 2.56
5 6 Multi-Family 2,005,705 1,792,590 1.12 1.50 1.68
7 Tier 1 1,200,936 1,142,299 1.05 1.50 1.58
8 Tier 2 361,240 293,917 1.23 1.50 1.84
9 Tier 3 443,529 356,374 1.24 1.50 1.87
10 11 Commercial Small
(𝟓𝟓 𝟖𝟖� "-1'') 349,732 319,928 1.09 1.50 1.64
12 Tier 1 108,583 110,837 0.98 1.50 1.47
13 Tier 2 165,299 141,899 1.16 1.50 1.75
14 Tier 3 75,850 67,193 1.13 1.50 1.69
15 16 Commercial Medium
(1 ½’’-4'') 1,899,273 1,518,584 1.25 1.50 1.88
17 Tier 1 574,524 531,273 1.08 1.50 1.62
18 Tier 2 839,350 669,371 1.25 1.50 1.88
19 Tier 3 485,399 317,939 1.53 1.50 2.29
20 21 Commercial Large
(6''+) 1,728,992 1,220,306 1.42 1.50 2.12
22 Tier 1 474,882 424,454 1.12 1.50 1.68
23 Tier 2 746,039 536,737 1.39 1.50 2.08
24 Tier 3 508,071 259,115 1.96 1.50 2.94
25 Total 12,394,523 9,688,618