Pasadena Water and Power
Public Hearing: Electric Rate
Ordinance Adjustments
City Council
March 2, 2026
Item #9
Pasadena Water and Power
Led by Chair Jones, MSC led the
process of i terati ve probl em
sol vi ng to address rate setti ng and
e s t a b lis h p o lic y d ire c t io n .
Municipal Services Committee & Council
Our Foundation: Council Leadership and
Community Engagement
Hundreds of resi dents took ti me to
l earn about how PWP del i vers safe,
rel i abl e power to thei r homes and how
we can partner to l ead for mutual
s u c c e s s a s a p u b lic u t ilit y.
Residents & Businesses
PWP Rate
Comparison
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. $161.60 $154.17
$131.76 $131.32
$109.26
Residential Electric Services Bill Comparison
As of February 2026 (with Pasadena Proposed Rates)
Amounts represent monthly total single family residential bill with usage of 500 kWh for the month of February 2026 .Amounts calculated using published rate schedules. Electric amounts calculated using non-time of use rate schedule. Amounts also exclude taxes and non-by passable surcharges. Information has been sourced from a publicly available information at the time generated. SCE includes wildfire insurance fund nonbypassable charges.
Phase 2
Phase 3
Phase 1
4 Cost Driver What the Research Shows
Infrastructure & distribution
investment
Distribution capital expenditures are now the single largest category of utility capital outlays, per CPUC. A 2024 Lawrence Berkeley National Laboratory report confirms sustained
growth in distribution system capital investment is a primary driver of rising retail electricity rates nationally.
Wildfire mitigation & grid
hardening
CPUC analyses confirm vegetation management, equipment
upgrades, and system hardening have materially increased revenue requirements statewide, with wildfire mitigation accounting for a large share of above-inflation rate increases for California IOUs.
Costs rising faster than inflation A January 2025 California LAO report found residential electricity rates statewide rose nearly 47% from 2019 to 2023 — far outpacing general price growth. PWP has not raised rates since 2019 and now faces accumulated pressure from this cost environment.
Fixed costs spread over flat
usage
California's flat per-capita electricity consumption means utilities must recover high fixed infrastructure costs over a revenue base that is not growing proportionally. Flat or declining usage per customer pushes rates upward
structurally.
Industry -Wide Cost Pressures
Study Process & Governance Timeline May 2024 – March 2026 May 2024
City Council
approves
NewGen
Strategies
contract
Oct 2024
Electric Rate
Study
introduced to
MSC
(info only)
Jan–Mar 2025
Direct Access
provisions
removed;
engagement plan
set
Jun 2025
Working Capital
Reserve Policy
established
Jul 2025
City Council
directs
two-year rate
adjustment plan
Oct–Dec 2025
Draft Financial
Forecast & COS
released publicly
Dec 9, 2025
MSC requests rate
alternatives
before
public hearing
Jan 13, 2026
City Attorney
guidance on legal
framework
requested
Feb 10, 2026
MSC approves
public hearing
recommendation
Mar 2, 2026
Public hearing
held — City
Council
acts on rates
Pasadena Water and Power | Electric Rate Study | March 2026 Planning for long-term stability
We are in excellent financial shape, with strong credit ratings and healthy reserves. That means we can make smart,
forward-looking investments now instead of putting them off while providing steady modest increases for our customers.
Our power grid needs upgrades
Much of Pasadena’s electric system is aging. To prevent outages and meet the growing demand for electricity—
especially with more electric vehicles and home
electrification—we need to upgrade substations, replace equipment, and strengthen power lines.
The cost of power resources are increasing
Since 2018, PWP purchases strictly renewable-only long-term energy to serve our community. This has put us ahead of state requirements and supports Pasadena’s 100% carbon- free goal. Renewable contracts are in high demand
nationwide with increasing costs to purchase.
The cost of equipment continues to rise
The materials we need to keep the lights on—like cables and transformers—have gone up in price dramatically.
Since 2019, cable costs have nearly doubled, and
transformer prices are up about 75%. These are essential parts of our system, and they’re more expensive and
harder to get.
Major reasons
for PWP Rate
increases
Rate Strategy
Cost of Service
• Revenue
Requirement
• Functionalize
• Classify
• Allocate
• Guide for cost -
based rates
“Rate Making”
• Policy Decisions
• Incentivize
behavior
• Industry practice is
to move towards
COS
Rates do not always
match COS; prop 26
compliance
Rates
• Collect sufficient
revenue
• Support community
goals
• Support utility goals
• Price signal to
customers
⁻ Convey i nformati on
⁻ Change behavi or
Rate Plan
Classes
Phase 1
March
2026
Phase 2
October
2026
Phase 3
March
2027
Residential 7% 7% 7%
Commercial - Small 7% 7% 7%
Medium - Commercial 7% 7% 7%
Large - Commercial 7% 7% 7%
Street Lighting 7% 7% 7%
Traffic Signals 7% 7% 7%
Total System 7% 7% 7%
Total annualized (year over year) average customer bill change.
TOU is seen as a fair and flexible option if it benefits both customers and the utility. Multiple requests forclearer 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 israising residential rates without enough renewable offset.
Continued
Customer
Engagement
9 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.
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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.
Customer Impacts
16 Changes will impact all customers at some
magnitude. To help customers understand what
these changes will mean to them, a bill estimator is
scheduled to be released after setting the hearing
date.
Customer/Account
Fee
Customer
Charge
$11.00/month
Grid Access
Charge
$6.50/month
Demand
Distribution Charge
First 350 kWh: 3.5¢
351- 750 kWh: 14¢
Above 750 kWh: 25¢
Energy
Energy
Services
Charge
10 ¢ per kWh
Transmission
Charge
1.6 ¢ per kWh
Phase 1 Pricing: Residential Rate Components
Customer/Account
Fee
Customer Charge
$11.00/month
Grid Access Charge
$6.50/month
Demand
Distribution
Charge
First 350 kWh:
3.5¢
351- 750 kWh: 14¢
Above 750 kWh:
25¢
Energy
Energy
Services
Charge
10 ¢ per kWh
Transmission
Charge
16 ¢ per kWh
Customer charge is 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.
Grid access charge is a fixed monthly
charge generally associated with the
fixed costs of connecting to and
maintaining the electric grid, regardless
of their energy consumption.
Demand
Distribution Charge
First 350 kWh: 3.5¢
351- 750 kWh: 14¢
Above 750 kWh: 25¢
Energy
Energy
Services
Charge
10 ¢ per kWh
Transmission
Charge
16 ¢ per kWh
Distribution charge” is 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.
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
Energy Services
Charge
10 ¢ per kWh
Transmission Charge
1.6 ¢ per kWh
EE. “Transmission services charge” is a usage-
based charge generally associated with the cost
of delivering electricity from the generating
plants to our sub-stations.
Energy services charge (including
power cost adjustment) is a usage-
based charge generally associated
with the solely variable cost of
generating the actual amount of
electricity consumed.
Transmission services charge is a
usage-based charge generally
associated with the cost of
delivering electricity from the
generating plants to our sub-stations.
Residential Customer Example
Qty Price Unit of
measure Cost
Customer Charge 1 $ 11.00 per month $ 11.00 Grid A ccess Charge 1 $ 6.50 per month $ 6.50 Distribution Charge 350 $ 0.03505 kWh $ 12.27 150 $ 0.14018 kWh $ 21.03
T ransmission Charge 500 $ 0.01609 kWh $ 8.05 E nergy Serv ices
Charge 500 $ 0.10084 kWh $ 50.42 $ 109.26
Current electric charges would be $115.01
A decrease of $5.75 for Phase 1
Phase 2: $124.59
Phase 3: $131.16
Does not include surcharges or other utility services or taxes found on PWP bills
Residential Customer Example
Qty Price Unit of
measure Cost
Customer Charge 1 $ 11.00 per month $ 11.00 Grid A ccess Charge 1 $ 6.50 per month $ 6.50 Distribution Charge 350 $ 0.03505 kWh $ 12.27 400 $ 0.14018 kWh $ 56.07
250 $ 0.25233 kWh $ 63.08
T ransmission Charge 1000 $ 0.01609 kWh $ 16.09 E nergy Serv ices Charge1000 $ 0.10084 kWh $ 100.84 $ 265.85
Current electric charges would be $251.39
An increase of $14.46 for Phase 1
Phase 2: $306.23
Phase 3: $330.19
Does not include surcharges or other utility services or taxes found on PWP bills The ordinance anticipates AMI deployment
a n d t im e- of - u s e p ric in g .
Future -readiness
Propose to move al l rate fi gures to the El ectri c
Ut ilit y Ra t e Re s o lu t io n , a llo w s a d ju s t m e n t s a n d a m o re lo g ic a l b u d g e t in g a n d p la n n in g process.
Streamlined governance
Technical alignment
Defi ni ti ons and schedul es now match CPUC
termi nol ogy, NERC standards, and CAISO
market conventi ons
Ordinance
Restatement &
Modernization
grounded in a thorough cost - of - servi ce
a n a lys is , w it h s t ru c t u ra l p ro t e c t io n s fo r lo w e r- in c o m e a n d lo w e r- u s a g e re s id e n t ia l customers;
Cost -based and equitable
a d d re s s in g a c o n firm e d $6 7.9 m illio n re ve n u e s h o rt fa ll t h a t w o u ld o t h e rw is e im p a ir t h e u t ilit y's a b ilit y t o d e live r s a fe a n d re lia b le s e rvic e
Financially necessary
Graduated and affordable
p h a s e d o ve r t w o ye a rs t o m in im iz e b ill shock, suppl emented by di screti onary L i ght
and Power Fund reserves;
Rate
adjustments
are…
Forward -looking
moderni zi ng the rate ordi nance to support
Tim e- of - Us e p ric in g , AMI d e p lo ym e n t , EV adopti on, and the Ci ty' s 1 00% carbon - free
e le c t ric it y g o a l b y 2 0 3 0 .
Legally compliant
conducted i n accordance wi th Cal i forni a
law and City Charter requirements
Led by Chair Jones, MSC led the process of
it e ra t ive p ro b le m s o lvin g t o a d d re s s ra t e s e t t in g a n d e s t a b lis h p o lic y d ire c t io n .
Municipal Services Committee and Council
Thank you!
H undreds of resi dents took ti me to l earn
about how PWP del i vers safe, rel i abl e power
to thei r homes and how we can partner to
le a d fo r m u t u a l s u c c e s s a s a p u b lic u t ilit y.
Residents and Businesses
Results in a system average
increase of 7%
7%
0 5000
10000
15000
20000
25000
< 0%
0% - 2%
2% - 4%
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10% - 13%
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33% - 36%
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40% - 42%
42% - 44%
44% - 46%
46% - 48%
48% - 50%
Number of Customers
Average Change in Residential Monthly Bill (%) Current to Phase 1
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
< -$10
(10) - $0
$0 - $10
$10 - $20
$20 - $30
$30 - $40
$40 - $50
$50 - $60
$60 - $70
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$180 - $190
$190 - $200
$200 - $210
$210 - $220
$220 - $230
Number of Customers
Average Change in Residential Monthly Bill ($) Current to Phase 1
23