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Council to Conduct Monday Public Hearing on Water Rates Increase

City's Environmental Advisory Commission expresses concerns about proposed 'Tiered by Customer Class' rates

Published on Monday, June 3, 2024 | 4:00 am

Ahead of Monday’s public hearing to consider the adoption of adjustments to the existing water rates and rate structure, the City’s Environmental Advisory Commission expressed “concerns about the new ‘Tiered by Customer Class’ rates as proposed.”

“We recognize that Pasadena Water and Power is funded by customer rate revenue rather than the General Fund, and thus it is dependent on rate revenue for operations and maintenance, capital investment, debt service, and reserve funding,” the Commission said in a letter to the City Council. “We also recognize that Pasadena Water and Power is now facing increased costs, including aging infrastructure that needs maintenance and replacement, water purchase price increases, inflation that effects construction costs, and power cost increases. As a result, Pasadena Water and Power faces costs that will exceed revenue in the years ahead. While the tiered by customer class rate structure proposed by Pasadena Water and Power may address some of those concerns, it raises other concerns that we believe demand further study.”

City staff is recommending the utility switch to a “Tiered by Customer Class” structure in which price increases would vary based on customer class (single-family residential, multi-family residential, or commercial), water meter size, and usage volume.

Under the city’s current “Tiered by Meter Size” rate structure, the amount of water allocated in each pricing tier is based on meter size, with revenue from each component recovering specific costs.

The Commission said it was concerned that the new rates will have a disproportionate impact on low and middle-income households. “Pasadena Water and Power’s case studies show that a ‘medium’ family would face a 21.6% increase in its monthly water bill under the proposed rate structure, and that a “large” family would face a 23.5% increase in its bill. Such increases would be an abrupt and significant burden on Pasadena residents already feeling the strain of rising costs in other aspects of their lives, including other City services.”

The City Council has already voted to increase sewer and refuse rates.

Local residents oppose the rate hikes.

“As a resident of Pasadena, I am concerned about the impact this rate increase will have on the community, particularly on households already struggling with the cost of living,” said Michael Johnston in correspondence to the City Council. “I urge you to reconsider this proposal and explore alternative solutions to address the rising operating costs and infrastructure improvements without imposing additional financial burdens on residents.”

The Commission is calling on the City Council to revisit the impact of these rate changes earlier than the proposed 5 year timeline by directing the Department of Water to produce a comprehensive review in 2-3 years, with a particular focus on conservation and equity.

“We recognize that Pasadena Water and Power’s rate structure proposal is the result of a tremendous amount of expertise, consideration, and hard work by Pasadena Water and Power. We also recognize that Pasadena Water and Power needs to take in more revenue than the current rates are generating,” the Commission said. “Nevertheless, we think that the considerations outlined above deserve further attention. We would like to see Pasadena Water and Power undertake rigorous and transparent analysis in the areas of equity and conservation throughout the transition to these new rates, and devise a process to report those findings to the Council.”

To help customers understand the potential impact, Pasadena Water and Power is developing an online rate calculator and will be updating its website with educational materials and videos ahead of the hearing.

In February, the Municipal Service Committee of the Pasadena Water and Power was tasked with expanding its analysis of alternative “Water Budget-Based Tiered Rates” after studying the successful implementation of such rate structures by utilities like the Eastern Municipal Water District, Las Virgenes Municipal Water District, and Irvine Ranch Water District.

Following the hearing, the City Council is scheduled to conduct a first reading of the rate ordinance the same night and a second reading on June 10.

The proposed increases in Pasadena mirror a national trend of rising water costs, with average water and sewer bills across the country increasing by 41.2% percent over the past 12 years, according to Bluefield Research, as reported by The New York Times.

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