Council to Weigh $104 Million Refinancing of Electric Utility Obligations in Move That Could Save Millions

The Pasadena City Council will decide Monday, Aug. 31, whether to authorize up to $104 million in bonds to refinance obligations owed by the city’s electric utility.

The Water and Power Department projects the refinancing would save about $6.8 million in net present value, or 7.4% of the bonds being retired. The proceeds would go to a refunding escrow and to issuance costs. It would replace bonds Pasadena sold in 2016 at interest rates the market has since moved below.

Two linked items are before the council. Members would adopt a resolution inviting bids for the new bonds. They would also conduct a first reading of the ordinance authorizing them. Article XIV of the Pasadena City Charter requires an ordinance stating the purpose, the principal amount and the maximum interest rate before the city can issue revenue bonds.

The Electric Revenue Refunding Bonds, 2026A Series, would carry fixed interest rates and a cap of 5.5% on true interest cost. They would go to the bidder offering the lowest true interest cost. Bidding is scheduled for Oct. 26, 2026. Final maturity would stay at Aug. 1, 2045, the same end date as the debt being replaced.

Repayment would come only from the Light and Power Fund, which holds Pasadena Water and Power revenue. The bonds would not become an indebtedness of the city. Debt service would be met from existing and future appropriations from that fund, and the department reports that current rates cover it. The department reports no impact on the General Fund.

The debt dates to Nov. 7, 2016, when Pasadena issued $119.44 million in electric revenue refunding bonds. With premiums, the sale produced $141.9 million. Of that, $60 million retired a line of credit used to finish the GT5 Repowering Project. Another $30 million funded part of the electric distribution system’s capital program. A further $47.13 million refunded bonds the city had issued in 2008.

About $92.09 million of the 2016 bonds remains outstanding, at coupon rates between 4% and 5%. Comparable electric system bonds now yield roughly 3.7%. Pasadena may redeem the 2016 bonds at full value at any time on or after June 1, 2026. The refunding would retire the entire remaining balance.

Under Senate Bill 450, the city estimates true interest cost at 3.7% and total principal and interest payments of $105.9 million through final maturity. The new bonds would be structured as parity bonds alongside the city’s 2024A electric bonds, with a funded reserve of $0.

The Finance Committee reviewed the proposal Aug. 24 and voted unanimously to recommend approval. The resolution would also appoint Best Best & Krieger LLP as bond and disclosure counsel and PFM Financial Advisors as municipal advisor.

The proposal comes in the same year the council raised electric rates. Members approved three 7% increases phased across April 2026, October 2026 and March 2027, expected to generate about $84 million a year. As part of that vote, members agreed to revisit the plan after the second phase to determine whether the third is still necessary. Roughly 77% of the utility’s cost structure is fixed.

Municipal Services Committee Chair Justin Jones said in March 2026, as those increases were under review, that “we have a responsibility to invest in maintaining and modernizing our system.”

Karin Schnaider, the city’s director of finance, submitted the proposal. It was prepared by Water and Power Assistant General Manager Lynne Chaimowitz and approved by General Manager David M. Reyes. Interim City Manager Matthew E. Hawkesworth concurred.

Actual savings will depend on market conditions when bidding closes Oct. 26, 2026. The meeting begins at 6 p.m. in the Council Chamber at Pasadena City Hall, 100 N. Garfield Ave., after a 5 p.m. closed session.