Pasadena Water and Power Seeks 9.5% Annual Rate Hikes to Close $67.9 Million Gap

Pasadena Water and Power faces a $67.9 million revenue shortfall over the next two years. That stark finding is driving proposed electric rate increases that city officials will discuss Tuesday.

The Municipal Services Committee meets at 4 p.m. in City Council chambers. Members will consider setting a Feb. 9, 2026, public hearing on PWP’s rate recommendations.

In a report for Tuesday’s meeting, PWP said it has completed a comprehensive rate study with consultant NewGen. The analysis revealed the massive gap under current pricing.

Officials are recommending phased increases of 9.5% annually for fiscal years 2026 and 2027. New rates would take effect March 1, 2026, if approved.

The increases would roll out in three steps. The first comes in March 2026. October 2026 brings the second. The final phase hits in March 2027.

PWP’s revenue requirements average $259.6 million for the two-year period, the report said. Forecasts show total needs of $334 million in fiscal 2026 alone.

Rising costs are squeezing the utility hard. Equipment and material expenses have jumped 75% to 100% since 2019.

Clean energy procurement costs have doubled in five years. The utility is also investing in battery storage and wildfire resilience.

Without rate adjustments, PWP’s $409 million in reserves would drop $134 million by fiscal 2029.

Despite the proposed hikes, Pasadena rates remain the region’s lowest, the report said. The utility charged $115 for typical residential use in November 2025.

That compares favorably to competitors. Southern California Edison billed $191. Los Angeles Department of Water and Power charged $139.

Glendale’s rate hit $178. Even Burbank, at $107, came close to Pasadena’s pricing.

The rate study also recommends updating the city’s electric rate ordinance. Changes would modernize outdated provisions in Title 13, Chapter 13.04.

Updates would support time-of-use pricing and advanced metering. They would also facilitate electric vehicle programs and local solar initiatives.

PWP emphasized equity in its proposal. Low-income households would receive 100% offset of fixed charges through the Public Benefits Charge.

The utility conducted extensive public outreach. It held webinars and open houses. Officials created a dedicated website at engagepwp.org.

Commercial customers participated in the process. Volkswagen Pasadena praised the utility’s collaboration efforts.

PWP plans to launch a bill estimator tool for transparency. Customers expressed interest in EV incentives, solar storage and time-of-use rates.

The rate increases aim to support PWP’s ambitious clean energy goals. The utility targets 100% carbon-free electricity by 2030.

California’s investor-owned utilities have raised rates more steeply. Some charge up to 40 cents per kilowatt-hour.

Publicly owned utilities like PWP maintain lower rates. Local governance and not-for-profit structure provide cost advantages.

The proposed adjustments would generate $21.5 million in additional revenue for fiscal 2026, PWP said. Fiscal 2027 would bring $25.5 million more.