Pasadena Water and Power
Electric Rate and
Ordinance Adjustments
Municipal Services Committee
December 9, 2025
Item #1
Findings reveal significant revenue gaps and customer
impacts.
Rate Study
Proposed Changes
Being responsive to Council and the Community to
incorporate feedback into a rate adjustment plan.
Agenda
Overview
Customer Impacts
Showing how our customers will be impacted by various
scenarios.
Ordinance Updates
Showing how our customers will be impacted by various scenarios.
This study addresses compliance and changing energy needs. The last major study 2018. Last comprehensive ordinance review unknown.
The findings are compliant with Prop 26 (cost-of-service), usage profiles by customer class have changes, the industry has changes, and there are strategic ways to incorporate the transformation to a carbon-free utility in the rates.
Purpose and Findings
3 Debt Service Coverage Ratio
This indicates strong financial health and
stability for PWP.
Reserves Above Policy
Minimums and Targets
Maintaining minimum reserves ensures
operational reliability and sustainability.
> Minimums
6.4AA
Outlook Stable
Credit Rating
Ability to support planned $50 million
bond issuance in FY28.
Starting from a place of
financial strength
Understanding the financial challenges facing Pasadena
Water and Power today
The study indicates a $67.9 million revenue gap, necessitating action. Drivers being supply, inflations, infrastructure reinvestment, and power procurement.
What the study shows:
4 The primary cost drivers affecting rates include increasing infrastructure investments, supply inflation, and energy supply, all contributing to ongoing financial pressures for the utility.
Key drivers for electrical pricing
Cost Drivers
5 87%
101
%
29%
18%
149
%
45%
85%
29%
-7%
23%
251
%
20%
50%
Aligned charges with functions
and assigned costs to users to
develop plan to adjust.
The study indicates a significant 39%
under-recovery in residential rates.
Cost of Service
4 39%
7%
-6%
6%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$-
$0.050
$0.100
$0.150
$0.200
$0.250
$0.300
$0.350
Residential Commercial - Small Medium - Commercial
Primary and Secondary
Service
Large - Commercial Primary
and Secondary Service
RATE CHANGE
EFFECTIVE RATE ($/KWH)
Cost-of-Service vs. Test Year Effective Rate
COS TY Rate Difference % System Average
Projected decrease in reserves over
the next few years
The analysis indicates a significant decline in
reserves, emphasizing the urgent need for rate
adjustments to ensure sustainability.
Why Adjustments now?
7 $353 $341
$299
$342 $332
$284
FY 2026 FY 2027 FY 2028
Working Capital
(in millions)
Alt 1 Alt 2 Minimum Reserve Target Reserve
Immediate Financial Action
Sharp increases in costs necessitate urgent
adjustments to avoid significant reserve
depletion and ensure continued reliability and
service quality for Pasadena Water and Power
customers.
Incentives are available for energy-saving home
improvements and upgrades.
Efficiency Programs
PWP offers financial assistance to eligible low-income
customers. Fixed fees escalate offsets when rates increase for Electric Utility Assistance Program.
Low-Income Offsets
Solar Sizing
Customers can size solar systems up to 150% of their load to meet future demand for electrification.
Affordability
and Support
Programs
10 PWP Rate
Comparison
SoCal Edison
$191.60 Glendale
$178.68
LADWP
$139.71
PWP -
November 2025
$115.01 Burbank
$107
The Public Power Promise
Pasadena Water and Power rates remain competitive, providing reliable service while maintaining affordability compared to California's major investor-owned utilities. *Amounts represent monthly total single family residential bill with the usage of 500 kWh for the month of November 2025. Amounts calculated using published rate schedules. Electric amounts calculated using published non-time of use rate schedules. Amounts also exclude taxes and non bypassable surcharges. Information has been sourced from publicly available information at the time generated.
TOU is seen as a fair and flexible option if it benefits both customers and the utility. Multiple requests for clearer communication—e.g., charts showing peak vs. off-peak hours. Some concern about TOU penalizing all-electric homes or those with higher baseline usage.
Time-of-Use (TOU) Rates: Mixed but Generally
Positive
Widespread enthusiasm for rooftop solar, especially with fewer restrictions (e.g., no production caps, easier permitting). Desire for expanded solar incentives: rebates, subsidies, and retroactive benefits. Interest in solar battery storage and related rebates.
Some customers are concerned about perceived resistance from PWP toward locally generated solar.
Strong Support for Renewable Energy and Solar
Electric Vehicles (EVs): Incentives and Rate
Structures Needed
Strong interest in EV-specific rates, especially for overnight charging.
Requests for rebates or discounts for EV owners, including plug-in hybrids. Some concern that EV adoption is raising residential rates without enough renewable offset.
What we heard
from our
customers, so
far….
11 Affordability and Equity
Rebates and incentives are seen as critical tools to help customers adopt sustainable practices. Some residents are willing to pay more voluntarily to support low-income households. Concerns about rate fairness for renters, all-electric homes, and those with limited upgrade options.
Renters and Multi-Family Housing: Underserved
Segment
Renters feel excluded from current programs (e.g., solar, EV charging).
Interest in energy-efficient appliances and shared infrastructure solutions.
Education, Transparency, and Trust
Requests for more education on sustainable living and rate structures. Some skepticism about utility motives (e.g., profit vs. sustainability). Desire for greater transparency in infrastructure spending and rate design.
Exploring new adjustments to better serve customers
Proposed Changes
12 Rate Components
Remain Substantially
the Same
Customer charge
A fixed monthly charge regardless of energy use. It is generally associated with services such as billing, customer service, meter reading, and connection to the grid.
Distribution charge
A usage-based charge generally associated with the cost of delivering electricity from the substations, including operation and maintenance costs, capital investment and debt service.
Energy services charge
A usage-based charge generally associated with the solely variable cost of generating the actual amount of electricity consumed, measured in kWh (included power cost adjustment).
Grid access charge
A fixed monthly charge generally associated with the fixed costs of connecting to and maintaining the electric grid, regardless of their energy consumption.
Transmission charge
A usage-based charge generally associated with the cost of delivering electricity from the generating plants to our sub- stations..
$-
$50
$100
$150
$200
Current Avg. Use Current Above Avg. Use
Current Residential Customers Bill Components with
Average (500 kWh) or Above Average (1,000 kWh) Usage
Customer Distribution Charge
Grid Access Charge Transmission Charge
Energy Charge
The residential inclining block structure encourages efficient energy use, charging residents based on their consumption levels. This approach supports fairness and promotes sustainability within the community's energy framework.
Energy Consumption Tiers Explained
Residential Usage
Blocks
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
0- 350 kWh 351-750 kWh > 750 kWh
Distribution Charge Blocks for
Residential Customer Classes
Current Proposed
Future Readiness
With Time-of-Use Default Enrollment
Supports reliability
Sharp increases in equipment and renewable costs necessitate urgent adjustments to avoid significant reserve depletion and ensure continued reliability and service quality for customers.
Encourages off-peak use
Sharp increases in equipment and renewable costs necessitate urgent adjustments to avoid significant reserve depletion and ensure continued reliability and service quality for customers.
Customer
Classifications
Key Benefits Explained
Electric Vehicle Rates
This structure encourages charging during
lower-cost periods, supports reliable grid
management, and helps customers plan
charging costs with more certainty.
Extra Large Customer Class
This helps PWP match costs with usage more
accurately and supports system planning for
large facilities through increased options for
potential collaboration to expedite common
goals, through long-term contracting
mechanisms and more integrated procurement
planning.
20 Rate Alternatives
Alternative 1 (NOT RECOMMENDED)
This approach proposes an immediate adjustment to rates, impacting all customers at once. While effective, it could lead to significant increases and customer dissatisfaction.
Alternative 2 (RECOMMENDED)
This option suggests implementing changes in three steps over two years, allowing customers to adjust gradually while addressing revenue needs more sustainably without shock increases.
$228 $228
$294
$263
$36 $36
$22
$5 $19
$32
$40 $5
$0
$50
$100
$150
$200
$250
$300
$350
Alternative 1
(March 2026)
Alternative 2
(March 2026)
Alternative 1
(March 2027)
Alternative 2 (Oct
2026 & Mar 2027)
Millions
Figure 6: Cashflow Impact
Projected Revenues Debt
Application of Reserves Revenue from Rate Increase
Under recovery of Costs (Addt'l reserves) Revenue Requirement FY 2027FY 2026
Customer Impacts
16 Changes will impact all customers at some
magnitude. T o help customers understand what
these changes will mean to them, a bill estimator is
scheduled to be released after setting the hearing
date.
The following customer bill samples are high level
averages for illustrative purposes only.
Following sample bills are monthly with variable
usage.
Sample Customer Bill Impact
Average Residential Customer
Bills
The average consumption was calculated for single-
family and multi-family residential. The statistical
average was approximately 500 kWh which is used
for the alternative comparisons in this graphic.
Amounts represent monthly total bill for a winter
month. Energy Services Charge includes projected
Power Cost Adjustment. Current bills were calculated
using the November 2025 power cost adjustment
figure included in the energy services charge.
$115.01
$150.24
$144.10 $144.10 $144.10
$115.01 $113.17
$123.17
$135.11 $135.11
$-
$20
$40
$60
$80
$100
$120
$140
$160
Current Bill March 2026 October 2026 March 2027 March 2028 Residential - Average Use (500 kWh)
Alternative 1 Alternative 2
Sample Bill Impact
$251.39
$347.67 $355.94 $355.94 $355.94
$251.39
$273.52
$303.25
$337.95 $337.95
$-
$50
$100
$150
$200
$250
$300
$350
$400
Current Bill March 2026 October 2026 March 2027 March 2028 Residential - Above Average Use (1,000 kWh)
Alternative 1 Alternative 2a
Commercial
Sample Bills Impact
17 $-
$50
$100
$150
$200
$250
$300
$350
$400
$450
Current Bill March 2026 October 2026 March 2027
Small Commercial @ 1,500 kWh
Alternative 1 Alternative 2a
Single-Family
Residential,
227,420,945, 22%
Multi-Family Residential,
109,707,234, 11%
Small Commercial,
190,425,067, 19%
Medium Commercial,
235,361,748, 23%
Large Commercial,
254,319,300, 25%
Commercial
Sample Bill Impact
17 $-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Current Bill March 2026 October 2026 March 2027
Medium Commerical @ 15,000 kWh
Alternative 1 Alternative 2a
Single-Family
Residential,
227,420,945, 22%
Multi-Family
Residential,
109,707,234, 11%
Small Commercial,
190,425,067, 19%
Medium
Commercial,
235,361,748, …
Large Commercial,
254,319,300, 25%
Commercial
Sample Bill Impact
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
Current Bill March 2026 October 2026 March 2027
Large Commercial @ 175,000 kWh
Alternative 1 Alternative 2a
Single-Family
Residential,
227,420,945, 22%
Multi-Family Residential,
109,707,234, 11%
Small Commercial,
190,425,067, 19%
Medium Commercial,
235,361,748, 23%
Large Commercial,
254,319,300, 25%
The ordinance anticipates AMI deployment, time-of-use
pricing, distributed generation (net energy metering and clean energy buyback), and renewable integration
Future-readiness
Propose to move all rate figures to the Electric Utility Rate Resolution, allows faster Council-approved adjustments
Streamlined governance
T echnical alignment
Definitions and schedules now match CPUC terminology,
NERC standards, and CAISO market conventions
Ordinance
Restatement &
Modernization
18 Mail Notices
December notices will
inform customers
about proposed rate
adjustments and
hearings.
February 9 public
hearing will allow
community feedback
on adjustments.
Public
Hearing
Ordinance
Adoption Rate Action
Engagement Timeline
Ordinance adoption
expected late
February to early
March for
implementation.
March 2026 marks
the first rate
adjustment effective
for customers.
19 Why This Plan
Works
Key Benefits Explained
Sustainable Growth
The leaf symbolizes our commitment to
achieving carbon-free goals while promoting
sustainable energy practices for future
generations.
Reliability Shield
This symbol represents protection and
reliability, ensuring consistent energy services
for the community.
Economic Stability
This icon signifies financial health, ensuring
that energy remains affordable while investing
in necessary improvements.
26 Alignment with 100% Carbon-Free
by 2030
Program enhancement and clarification to encourage local generation for customers up to 1 MW . Establish new
program not tied to State program, compensate for retail rate of energy service charge plus a renewable premium, mandate enrollment in TOU when implemented. No
change to customers already enrolled in annual net
metering. Clarify solar sizing up to one and a half times historical consumption.
Net energy metering
New program to attract local generation by developers. Pay for generation established by contract.
Standard Offer – Local Clean Energy
(Feed-in-Tarriff)
Self-Generation
Program for customers over 1 MW. Bill credits (savings) on energy services charge rate at a 1:1 ratio.
Optional premium program for customers to financially
support transition to carbon-free energy.
Green Power Program