Pasadena Moves to Reform Power Fund Structure, No Rate Hike Expected

The Pasadena Water and Power Department will present a comprehensive utility reserve modernization proposal as a new business item at the Municipal Services Committee meeting on Tuesday, Feb. 11 at 4 p.m. in the Pasadena City Council Chamber, Room S249.

The plan asks the City Council to direct the City Attorney to prepare an ordinance within 60 days that would transform a decades-old stranded investment reserve into a more flexible working capital reserve system, amending several sections of the Pasadena Municipal Code Chapter 13.04.

Following Government Finance Officers’ Association and industry best practices, the proposal would streamline code sections affecting the Light and Power Fund’s reserves. The new structure aligns with City Council goals for fiscal responsibility, infrastructure enhancement, and sustainability.

The modernized system would establish four main reserve categories, each with specific targets: a Liquidity Reserve equivalent to 90 days of operating expenses plus annual bond payments and capital improvements; Energy Services and Transmission reserves set at 90 days of projected costs; and a Contingency Reserve covering 90 days of operating expenses and capital work plan.

The existing Stranded Investment Reserve, established in 1996 and funded through ratepayer contributions, was originally created to address potential losses from the Intermountain Power Project and Magnolia projects during industry restructuring. While initially limited to covering stranded investment risks, it has since been used for broader purposes, including an $80 million bond defeasance and providing $7 million annually from 2018-2022 to mitigate power supply cost increases.

The reorganization, which comes amid an ongoing electric rate study, requires no additional ratepayer contributions. Pasadena Water and Power states the change will improve financial stability and protect customers from abrupt rate adjustments while maintaining the utility’s creditworthiness.

The public can participate in several ways. In-person attendees should submit speaker cards before the meeting at www.cityofpasadena.net/commissions/public-comment/.

Virtual participation is available through cityofpasadena.net/cczoom or by phone at 1-669-900-6833 (Meeting ID: 161 482 446). A speaker card help line (626) 744-4124 opens 30 minutes before the meeting. Written comments can be emailed to cityclerk@cityofpasadena.net.

The meeting will be livestreamed at:

 http://pasadena.granicus.com/MediaPlayer.php?publish_id=9 and www.pasadenamedia.org. Assistive listening devices and language translation services are available with 24-hour notice by calling (626) 744-4124.

As an administrative action with no direct environmental impact, the proposal is exempt from California Environmental Quality Act review. Following committee review, the item will advance to the full City Council for consideration.