Lawsuit, Capital Improvement Needs Prompt Two Rounds of Rate Hikes for PWP

Published : Monday, May 13, 2019 | 5:02 AM

[Updated]  Pasadena’s City Council is scheduled to vote Monday night on two rounds of pricing changes proposed by Pasadena Water and Power which would increase the cost of water to every Pasadena resident and business.

Part of the price hike stems from a court decision. The settlement approved by a Los Angeles Superior Court judge would raise water rates for most customers inside the City of Pasadena, and reduce rates for those of its customers outside the City.

PWP’s service area includes all of Pasadena, and parts of Altadena, Sierra Madre, Arcadia and South Pasadena, with a total combined customer base of about 170,000.

About 83 percent of customers are within Pasadena City limits.

The class-action lawsuit, Howard Jarvis Taxpayers Assn. et al. vs. the City of Pasadena, challenged a 25-percent surcharge and distribution and customer (D&C) differentials that PWP was charging for water service to customers who are not residents of Pasadena.

A settlement in the case was reached in October 2018.

The recommended rates are also impacted by an internal water cost-of-service and rate design analysis that was completed in 2018, PWP said.

In the Agenda Report, PWP said eliminating the rate differentials in the D&C charge, commodity and capital improvement charges for customers outside of the city limits will increase overall average water rates for customers inside Pasadena city limits by about three percent.

Meanwhile, overall average water rates for customers outside City limits will decrease by about 17 percent.

“This disproportionate rate impact is the result of the cost shift associated with a relatively smaller number of outside city customers spread over a larger number of inside city customers,” PWP explained.

In addition, PWP is also recommending the elimination of winter and summer rate differentials in commodity and CIC charges and an increase in projected D&C annual revenues by $3.4 million effective August 1, and increasing D&C annual revenues by $3.7 million, thereby increasing the system average by 5.8 percent for all customers, effective July 1, 2020.

The adjustments are part of a phased-rate action plan that PWP is recommending to “maintain fiscal responsibility, recover sufficient revenue to meet increased operating costs, and provide pay-go funding for capital investment” that will also manage potential customer bill impacts, PWP explained.

Monday’s public hearing will proceed after a first reading of the proposed water rate ordinance. A second reading is scheduled for May 20, according to the agenda.

Public hearings during the City Council meetings on Mondays are held around 7 p.m. at the City Council chambers, Room S249 at City Hall.