Pasadena Considers Phased Electric Rate Increases to Fund Infrastructure Upgrades

City officials are weighing a series of electric rate increases aimed at funding major upgrades to the city’s power system, with a public hearing scheduled Monday before the City Council.

The proposed plan would raise electricity rates in three phases 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.

“Pasadena Water and Power must operate as efficiently and cost-effectively as possible while meeting the power-generation goals set by the Council. At the Municipal Services Committee, we pushed to reduce the proposed increases to lessen the impact on residents. At the same time, we have a responsibility to invest in maintaining and modernizing our system to ensure reliable service and long-term sustainability,” said Municipal Services Chair Justin Jones.

City staff said 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.

Officials stressed that maintaining and modernizing this infrastructure is essential to ensuring long-term reliability and safety for customers.

Pasadena Water and Power, the city’s municipally owned utility, 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. Officials said strengthening the underlying delivery system is a necessary step to support that transition and integrate cleaner energy sources.

The rate proposal follows 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.

In response to concerns about affordability, the City Council directed staff to develop a more gradual approach.

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.

If approved, 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.

The City Council is expected to close the public hearing and consider adopting a resolution to implement the new rate structure. A first reading to amend the city’s Light and Power Rate Ordinance is also scheduled as part of the process.

Officials said the proposal aligns with broader city goals of maintaining fiscal stability, improving infrastructure and supporting sustainability efforts, while attempting to balance those priorities with affordability for residents and businesses.