Guest Opinion: Sam Berndt | Pasadena’s Power Play: Residents Pay More So Big Business Can Pay Less

Pasadena Water and Power’s (PWP’s) new Electric Rate Study amounts to a subsidy for the city’s largest commercial users, funded by steep hikes on Pasadena’s residents and attacks on rooftop solar.

On Tuesday at 4:00 p.m., PWP will present its Electric Rate Study to the Municipal Services Committee. Prepared with consultants NewGen Strategies and Solutions, LLC, the study outlines two alternative rate-adjustment plans intended to close PWP’s projected $67.9 million shortfall over the next two years – driven by inflation and deferred maintenance of critical infrastructure. Both plans would raise electricity rates in three phases, concluding in March 2028.

But the way the burden is distributed across customers is anything but balanced.

According to PWP’s own examples, by 2028 residential customers will face the steepest increases – paying between 27 and 35 cents per kilowatt-hour, a jump of 17% to 41%, depending on usage. Small commercial users would see 14% to 18% increases, while medium commercial customers would absorb 18% to 20%. Yet the largest commercial customers – the biggest energy consumers in the city – would see the smallest hike of all: just 3% to 7%, paying roughly 22 cents per kilowatt-hour, significantly less than what residents will pay.

PWP frames this as an issue of “fairness,” arguing that residential users “drive a significant portion of system demand and infrastructure needs” and should therefore shoulder a greater share of the cost. But the study itself contradicts that claim. It shows that commercial entities collectively account for 67% of electricity consumption. The 128 largest commercial customers – just 0.19% of PWP’s customer base—consume 25% of all electricity sold. Meanwhile, Pasadena’s 59,114 residential customers—88% of all customers—consume only 33%.

Calling this reallocation of costs “fairness” obscures what it actually is: a significant transfer of financial burden from large corporations onto Pasadena households – an all-too-familiar theme in today’s political climate.

Perhaps it’s no surprise, then, that the report quotes the Vice President of Volkswagen Pasadena praising the process, calling it “a perfect example of joint collaboration needed to help ease any concerns regarding future rate increases.” For large commercial users, there’s not much to be concerned about.

Meanwhile, PWP is also proposing to weaken Net Energy Metering (NEM) incentives for both existing and new rooftop solar customers. Existing monthly and bimonthly NEM customers would see their credits reduced by 6 cents per kilowatt-hour. New customers would fare even worse: in addition to this reduction, their Renewable Energy Credit would drop from 2.5 cents to 1.8 cents per kilowatt-hour. In total, a 45% cut in benefits for new NEM participants. These changes would significantly discourage investment in rooftop solar, despite repeated – albeit not explicit – guidance from the City Council to preserve current NEM incentives in order to meet the city’s goal of adding 70 megawatts of local solar by 2030.

Pasadena now faces a choice: let residents subsidize the city’s largest corporations, or reform PWP’s rate structure to ensure equity, support local solar, and stay on track for 100% carbon-free electricity by 2030. City leaders and the public must hold PWP accountable before these changes become permanent – Pasadena’s commitment to clean, affordable, and equitable energy depends on it.

Sam Berndt, member of the PASADENA 100 Steering Committee. PASADENA 100, a coalition of non-profit and non-partisan organizations and individuals, remains committed to meeting the goal laid out in Pasadena City Council’s Climate Emergency Resolution 9977, unanimously adopted in January 2023, which calls for 100% carbon-free electricity by 2030 while optimizing affordability, equity, stability, and reliability.