Sabha, Tamer
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cityclerk
Monday, September 8, 2025 8:04 PM
Iraheta, Alba; Jomsky, Mark; Robles, Sandra; Sabha, Tanner; McMillan, Acquanette (Netta); Sco, Christine; Ashikyan, Elizabeth; Padilla, Adrian FW: MSC 09.09.2025 Item #1 - Electric Rate Study Update From:
Sent: Monday, September 8, 2025 8:03:44 PM (UTC-08:00) Pacific Time (US & Canada) To: Jones, Justin <[email protected]>; Rick Cole <[email protected]>; Hampton, Tyron <[email protected]>; Lyon, Jason <[email protected]> Cc: cityclerk <[email protected]>
Subject: MSC 09.09.2025 Item #1 - Electric Rate Study Update CAUTION: This email was delivered from the Internet. Do not click links or open attachments unless you know the content is safe. Report phish using the Phish Alert Button. For more information about the Phish Alert Button view article "KB0011474" on the DolT portal.
Dear Members of the Municipal Services Committee,
PWP says it is "committed to demonstratingtransparencythroughoutthe [Electric Rate Increase] process by providing clear and accessible information, which helps build trust and ensures that customers are well-informed and involved in the decision-making process." (Electric Rate Study Update
09.09.2025, Page 4 of 5). Unfortunately, PWP has failed to meet this commitment. City Council members, residents and ratepayers deserve clear, logical, step-by-step explanations of the ratemaking process.
Pasadena Power's many updates on the Electric Rate Study presented to the Municipal Services Committee (MSC), the Environmental Advisory Commission (EAC) and City Council have provided incomplete and inconsistent information rather than clear and thoughtful explanations of the process to determine future electric rates.
PWP says that it's proposed system wide effective rate increase of 9.5% each for calendar years 2026 and 2027 is due in part to renewable energy prices which have more than doubled in the past five years. This incorrectly suggests that renewable energy is responsible for the rate increase while ignoring even larger increases in the cost of gas to generate "nonrenewable" energy. The Energy Department says the cost of gas used to generate power jumped more than 40% in the first half of 2025 compared to 2024. Another 17% increase is expected next year in 2026.
PWP has completed analysis of Total System Revenue Requirements (page 2 of 5) required for calculating System Wide Effective Rate. What costs were included in these revenue requirements? Cost calculations for local solar are incorrect because they assume that ratepayers are directly bearing the cost of private investment in solar. One of the long-awaited projects is Subtransmission Path 2 Upgrade. Nearly ati the cost for this project is allocated to FY2026 @ $39.8 million and FY2027 @ $24.6 million. These are capital costs which should be spread over an appropriate time period. Were these costs counted at face value for each year?
Revenue Requirements as outlined in SLIDE 15 (pdf page 37) 2025-8-12-Environmental-Advisory- Commission-Agenda.pdf include Net Margin as well as Operations & Maintenance, Debt Service, Transfers/Taxes and Capital Expenditures.
What is Net Margin? Where is it defined? How is it calculated? Is the annual 12% General Fund Transfer included as an Expense? The financial model used by consultants to calculate the rate increase is treated as an omniscient and infallible black box. In fact, results from the financial model depend on baseline data provided by PWP as well as assumptions built into the model. Proposed 9.5% system wide effective rate increases are projected to generate approximately $21.5 million and $25.5 million in additional revenues forfiscal years 2026 and 2027.
hlow was the 9.5% increase calculated?
Why are these revenue increases required?
Why is there no discussion of the effect on ratepayers? Annual increases of 9.5% are not "modest increases". While some rate increase is needed to meet rising costs, no amount of public engagement can make up for the persistent Lack of transparency in PWP's updates. Ratepayers must see real numbers, not just vague statements and imprecise graphs, to believe that the ratemaking process has been fair and equitable.
MSC must demand clear, logical, step-by-step explanations of the ratemaking process. For the sake of clear understanding by City Council members, residents and ratepayers, PWP's rate-making explanations must include actual numbers and calculations. Demystify the Rate Study!
Sincerely,
Genette Foster, CD 2