The City Council on Monday approved an electric rate increase implemented in three phases aimed at funding major upgrades to the City’s power system.
The plan will raise electricity rates in three stages beginning in April, followed by additional increases in October and March 2027. Each phase would implement a 7% increase across all customer classes, including residential, commercial and municipal users.
As part of the unanimous vote, elected officials agreed to revisit the increase sometime after the second phase to determine whether the third phase is still necessary.
“None of us ran for office on the platform that we would increase electric rates,” said Mayor Victor Gordo during Monday’s public hearing.
The Municipal Services Committee recommended the rate increase.
The rate increase proposal followed months of review and discussion by city officials. Earlier options presented to the Municipal Services Committee included steeper increases that would have raised residential rates by nearly 35% over two years.
The committee worked to get the rate increase down from a higher rate to the 22% increase.
“I am proud of the fact we were able to reduce the increase from 35% to 22%,” Cole said. “Our residents are facing higher gas prices, higher insurance prices and higher food prices, none of us are unsympathetic to these needs.”
Committee Chair Justin Jones, who chairs the committee, said the rate increases were discussed at six meetings before a proposal was finalized.
“We had numerous public discussions at the Municipal Services Committee, significantly reduced the overall increase, and during our discussion at City Council put guardrails in place requiring staff to return after the second phase to determine whether a third phase is truly needed,” Jones said. “That’s about accountability and making sure PWP is operating efficiently while protecting ratepayers.”
The Chamber of Commerce, and Caltech opposed the rate increase. Caltech would see an increase of $2.6 million every year in its power bill.
“We don’t want to see any kind of increase, but we have our expenses to take care of,” said Councilmember Gene Masuda.
The increases are necessary to generate sufficient revenue to operate and reinvest in Pasadena’s aging electrical infrastructure, which includes poles, wires, transformers and other critical equipment.
Maintaining and modernizing this infrastructure is essential to ensuring long-term reliability and safety for customers.
Pasadena Water and Power faces rising operational costs and growing capital investment needs. Much of the system’s cost structure is fixed, accounting for about 77% of total expenses, making stable revenue streams critical for maintaining service levels and financial health.
The proposed increases are also tied to the city’s broader energy goals, including a commitment to transition to 100% carbon-free power by 2030.
Strengthening the underlying delivery system is a necessary step to support that transition and integrate cleaner energy sources.
Under the current plan, the city would also use approximately $36 million in cash reserves to offset some of the immediate financial burden on ratepayers while still meeting revenue requirements.
The rate increases are expected to generate about $84 million annually in additional revenue. Those funds would be used to cover higher operating costs and finance capital improvements needed to maintain and upgrade the electrical system.
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