PWP Outlines $410 Million Fiscal Year 2027 Budget, Is Pressed for Savings and Performance Measures

Water rates have climbed, electric rates have climbed, and on Tuesday, May 26, Pasadena’s municipal utility asked the City’s Municipal Services Committee to advance a Fiscal Year 2027 operating budget of roughly $410 million.

One committee member, Councilmember Rick Cole, pressed Pasadena Water and Power Department staff to demonstrate measurable savings and performance results before the budget moves to the full City Council.

“Even a 1% savings is $4 million that our rate payers aren’t paying,” he said.

The committee took no vote on the budget. Committee Chair Justin Jones clarified during the meeting that the panel was “not approving anything here” but rather reviewing the proposal and forwarding it, with questions, to the City Council for action as part of the citywide operating budget process.

Cole zeroed in on the scope of the spending plan, calling it a “fiduciary responsibility not just to rubber stamp a $410 million budget.”

Cole said water operating expenses have risen 47% over three years and electric operating expenses 36% over the same period, and asked where the department is economizing on its existing base rather than only adding to it.

PWP taff indicated key performance indicators would be developed in coordination with the City Manager’s office before final budget adoption.

Lynne Chaimowitz, PWP’s Assistant General Manager for Finance and Administration, delivered the bulk of the budget presentation alongside General Manager David Reyes and walked the committee through the figures.

On the water side, revenues are projected to rise 8% to approximately $115 million, with expenses of $93.7 million, producing a positive net income. Chaimowitz said the increase reflects the third year of an approved five-year rate plan, with retail revenue expected to grow 5% and additional federal grant revenue included on the revenue side. Expense growth, she said, is driven largely by personnel legacy costs, a shift in how staff time is allocated between operating and capital, and rising water purchase costs, which are increasing about 5%.

She also told the committee PWP plans to come back and revisit the five-year rate plan, providing ongoing notice to council of fund health and longer-term forecasts.

On the power side, revenues are projected to increase 21% while expenses rise 12%, yielding positive net income of about $32 million. She said the figures incorporate previously approved rate adjustments and reflect higher wholesale energy sales offset by corresponding increases in fuel and wholesale energy expenses. The power fund also includes the charter-mandated general fund transfer. She cited modest load growth of about 1% for the year, with rate revenue projected at about $311 million.

Both utility funds carry strong credit ratings. Water revenue bonds are rated AAA by both Fitch and S&P, while electric bonds are rated AA with a stable outlook from both agencies.

Reyes opened the presentation by tying the operating budget to City Council priorities, including a proposed update to the department’s mission statement to incorporate sustainability and the city’s carbon-free energy goals. The existing mission statement commits PWP to providing “safe, reliable water and power with superior customer service,” he said, and the proposed update would carry that commitment forward while reflecting newer city goals.

Reyes said operating dollars support the department’s shift from short-term fossil fuel purchases to long-term clean power contracts, the planned 25-megawatt Glenarm battery energy storage system, municipal solar and storage initiatives, and grid modernization. He also highlighted that 41 of the city’s 45 fast electric vehicle chargers are currently operational.

City staff outlined Fiscal Year 2026 accomplishments including advancing the Explorer Well, developing a new east side well, expanding Arroyo Seco infiltration basins, replacing aging reservoirs at the Sunset Complex with seismically resilient facilities, and continuing community water conservation programs and rebates.

On the power side, staff cited securing $9.7 million in grants for the Glenarm battery storage project, expanded EV charging access, and continued compliance with regulatory requirements. The budget document identifies the funding as a California Energy Commission grant.

The proposed budget includes a modest enhancement request for five new full time employee positions: a water infrastructure engineer, a water conservation administrative intern, a senior customer service representative for billing, a systems engineer and administrator in information technology, and a management analyst.

A separate position dedicated to cybersecurity would be housed within the city’s centralized IT infrastructure to align with the city’s enterprise security program. Staff said the requests are modest relative to the department’s expanded workload from initiatives including the Integrated Resource Plan and Operations and Strategic Plan, and that PWP made no enhancement requests for several years prior to Fiscal Year 2024.

The water fund cash balance exceeds 60 days of operating expenses as required by fund balance policy. The power fund cash balance is projected to dip below the minimum working capital target in Fiscal Year 2027 due to a large expected capital outflow, with plans to issue debt to cover the gap and return to target reserve levels within five years.

Staff pointed to technology modernization efforts including moving from paper work orders to digital systems, and to long-term capital reinvestment in local water supply that would reduce reliance on imported water over time.

“We’re in a tough place where we haven’t actually finished those projects so we can’t show you the sort of results and cost savings, but that’s why we’re doing it is so that we can see at least stabilized cost increases into the future,” Chaimowitz told the committee.

Councilmember Tyron Hampton asked whether the department could quantify savings from customer migration to digital billing.

Reyes, relaying figures from Jeremy Marquette, PWP’s Assistant General Manager for Customer Service and Technology, responded that printing costs about $1 per bill and totals about $420,000 a year, meaning a full conversion to digital billing would represent roughly half a million dollars in annual savings.

Chaimowitz added that issuing a paper check costs an estimated $2 to $3 in staff time and postage when applied across PWP’s roughly 68,000 customers.

Cole said he was looking for “genuine measurement of how successful our investments are” across technology, conservation, stormwater recapture and getting people to go online, and said he expected “greater rigor when we talk about budget.”

Reyes said the executive team agreed on the importance of key performance indicators and was coordinating with the City Manager’s office to develop citywide KPIs, with department-level indicators to be shared with the City Manager the following morning.

Cole said he was reassured by the interim city manager that budget refinement, including performance measurement, would continue beyond fiscal year adoption, and urged staff to draw on existing performance measures used by other public and private utilities rather than “reinvent the wheel.”

Councilmember Jason Lyon said he appreciated the proposed mission statement update and reiterated a longer-term concern that the utility’s economic model relies on customers using less of its product. He renewed a suggestion that PWP consider becoming a service provider, installer, maintainer and wholesaler of solar, saying it would fit the department’s mission and give customers a trusted provider whose work integrates with the city’s system. Cole said he seconded the suggestion.

Chair Jones asked whether the public benefit fund could be used to offset electricity costs for residents during peak summer heat months, citing affordability concerns raised by constituents. Chaimowitz said the fund offers flexibility on spending and that PWP has studies underway, to be discussed during a future Operations and Strategic Plan update, examining rate equity and similar programs.

Jones also asked about progress on emergency water storage and the ability to purchase treated water for storage or to expand local supply. Chief Assistant General Manager for Water Stacie Takeguchi said the department continues to work on the issue, with no new update available, and is working with the Metropolitan Water District on programs to bring water in at untreated rather than treated rates. Asked by Jones whether PWP targets its top water customers with programs to reduce consumption, Takeguchi affirmed that it does.

In response to a question from Jones about a public comment on the general fund transfer, Reyes confirmed that eliminating the transfer would mean approximately $28.5 million less for the city’s general fund, which supports police, fire, public health, housing and other programs. Reyes said the transfer is required by City Charter unless specific findings are made, and that voters have approved it multiple times in the last 10 years. Chaimowitz clarified that the general fund transfer comes only from the power fund, not the water fund.

The committee received one written public comment on the item advocating for funding for solar and battery storage, which was posted online as part of the record. No speaker cards were submitted.

The Fiscal Year 2027 operating budget for Pasadena Water and Power now moves forward as part of the citywide operating budget process for City Council consideration, with KPIs to be developed in coordination with the City Manager’s office before final adoption.

The Municipal Services Committee also postponed the public hearing on the Pasadena 2025 Urban Water Management Plan and Water Shortage Contingency Plan to its next meeting. Chair Jones asked colleagues to submit questions in advance to Reyes and his team so staff can prepare responses for that discussion.