Pasadena to Conduct Electric Rate Study, Exploring New Pricing Structures

Pasadena Water and Power (PWP) will introduce a comprehensive Electric Rate Study at a meeting of the Pasadena City Council’s Municipal Services Committee on Tuesday.

The study will be presented as an “information only” item, meaning no action is expected to be taken at this stage. The introduction marks the beginning of a process to develop a new PWP rate plan.

NewGen Strategies and Solutions, LLC, a management and economic consulting firm specializing in utility services, has been contracted to conduct the study. The City Council approved the contract in May following a recommendation from the Municipal Services Committee.

NewGen primarily serves public sector utilities and has recently completed multiple electric rate studies in Southern California, including Glendale, Anaheim, and Riverside.

In a memorandum for the Municipal Services Committee, David M. Reyes, PWP Interim General Manager, said the study aims to balance revenue collection with community and utility objectives, evaluating rate structures and pricing incentives to accommodate evolving industry trends and customer practices.

Reyes said the study’s primary goal is to create a rate plan that aligns with established Council policies and legal constraints while sending price signals to customers. These signals aim to convey important information and encourage behaviors beneficial to both the community and the utility.

The study will be aligned with the Optimized Strategic Plan (OSP). The OSP outlines actions needed to achieve Pasadena’s goal of sourcing 100% of electricity from carbon-free sources by 2030.

The Electric Rate Study will incorporate various inputs, including economic metrics, historical revenue and expenses, Council-adopted budgets, and policy parameters. Community engagement is highlighted as a crucial component of the project’s scope. PWP plans to assess how best to convey information and incentivize behavior in a way that fits Pasadena’s unique customer base.

The study comprises several phases, with the first focusing on data gathering for the cost-of-service portion and building a financial model. This model will serve as the primary tool for analysis throughout the rate-making process.

Future phases of the study will include a comprehensive public participation process, rate design, scenario analysis, and ultimately, a recommendation to City Council for rate ordinance adoption.

PWP said electric system data collection efforts are nearing completion, with the development of the financial model and cost-of-service analysis already underway.

The utility plans to return to the Municipal Services Committee early this fall to recommend removing outdated provisions in the Pasadena Municipal Code. 

Additionally, PWP intends to present an informational item regarding the study’s plan for public participation. Progress updates on the Electric Rate Study will be reported to the Municipal Services Committee periodically throughout the project.

Tuesday’s meeting begins at 4 p.m. in the City Council Chamber at City Hall. It is open to the public.