Water Bills to Increase Starting July 1 as City Council Approves New Rate Structure

The Pasadena City Council, voting 7-1, approved the Pasadena Water and Power’s proposed new rate structure and rate adjustments, which will be effective starting July 1.

The approved rate structure includes a variable and a fixed charge based on customer class (single-family residential, multi-family residential, or commercial) and meter size.

Steve Gagnon from consultant Raftelis said under the new rate structure, water bills for a small family amounting to approximately $46.68 will increase by about $8.

A medium-sized family using 1,100 cubic feet of water will see an increase of about $14, and a large family using 2,000 cubic feet monthly would see an increase of $29.

Those who own a multi-family duplex using 1,700 cubic feet of water will see an increase of $9 in their water bill.

While residential customers will see increases, some commercial customers will see a reduction in their bills.

The bill of a medium-sized commercial customer using about 7,500 cubic feet monthly will decrease by $77, according to Gagnon.

“The reason for that is, as I mentioned, we’re doing a cost of service study and we revamped your fixed charges and this particular customer has a two-inch meter, and we’re using the fixed charges in proportion to how a two-inch meter flows the potential flow through a two inch meter,” said Gagnon. “We’re using capacity ratios right from the American Water Works Association. That created a shift in what a two-inch meter pays, and that’s the majority of the reason why this commercial customer is going down. And lastly, what I think is good news is clients always want to know or want to compare themselves with neighboring agencies.”

Amid concerns that only the residential customers will shoulder the increase, PWP Assistant General Manager Lynne Chaimowitz assured City Council that commercial customers will also be paying their fair share under the plan.

“We didn’t show an example from large commercial, but we also do have commercial customers paying their fair share. If you look at the prices for the large commercial customers, they’re actually greater than the single family residential customers. They’re just paying a lot more per customer because they use so much water,” said Chaimowitz. “Every customer class is paying their fair share under this rate plan.”

Under the rate adjustment plan, customers will see an increase of 13% in the first year of implementation, 2024. By 2025, the rate will increase by 12%, and by 2026, it will increase by 9%. There will be an 8% increase in 2027 and a 7% increase in 2028.

According to PWP, the increases are necessary to keep up with the costs of serving water. Factors driving the increases include increased purchase water costs for the Metropolitan Water District, higher pumping and treatment costs of local groundwater, increased capital investment in infrastructure projects, and reduced sales due to the city’s conservation goals.

In fiscal year 2024, PWP expects that the funds spent will exceed revenues collected.

“We do need the rate increase of 13% in the 2025 and that is to make sure that we have sufficient revenues coming in to 2027,” Chaimowitz said.

The rate adjustments are expected to generate a revenue of $42 million over a period of five years.

Chaimowitz said PWP understands that the increase would be difficult for some customers. She assured PWP is doing its best to secure grants to reduce the rate increases planned for the next years.

“A penny increase in the bill is uncomfortable so we’re not going to stop trying to find grants for funding, trying to find other sources to supplement this.”

Chaimowitz said staff is pursuing a low-interest federal loan program known as the Water Infrastructure Finance and Innovation Act (WIFIA) through the U.S. Environmental Protection Agency. If PWP is awarded the loan, staff will return to the City Council with a reduced rate plan.

The City Council asked PWP to return next year to provide updates on the WIFIA. They also asked PWP to evaluate budget-based rates in the next rate study.

“If we get the WIFIA loan, we are looking at 3% lower increase next year,” Councilmember Felicia Williams noted.

Twenty-three individuals sent a letter to the Council opposing the rate increase, saying it would disproportionately impact low—and middle-income households.

Councilmember Tyron Hampton is the sole Councilmember who voted against the proposal.

“I would be supportive of staff going after the loan. I’m not just supportive of the increase,” he said.