Municipal Services Committee Recommends City Council Sets June 3 for Water Structure Rate Public Hearing

The Municipal Services Committee voted to recommend that the City Council hold a public hearing on June 3 on a proposed water rate structure and adjustment.

Pasadena Water and Power uses a “block” or tiered rate structure to encourage conservation. Under that system, the less you use, the lower your cost.

The committee is also recommending the City Council adopt “Tiered by Customer Class” rate, which City staff says is the rate structure that balances competing pricing objectives.

The change, aimed at increasing Pasadena Water and Power’s revenues to cover its costs, would raise water bills for some customers.

Staff is also recommended implementing a drought rate to encourage water conservation during droughts.

In 2022, a consulting firm and staff conducted a comprehensive cost-of-service analysis and rate study for the water system. The study analyzed the cost of providing water service and indicated that adjustments are necessary to keep up with water service costs, recover costs equitably, and continue to support the City’s water conservation ethos.

Based on calculated indoor and outdoor water allotments. Several members of the community have spoken out in support of that system.

Previously a consultant, Steve Gagnon from outside consultant Raftelis told the committee, “there is additional cost to implement budget-based tiered rates” versus the staff-recommended Tiered by Customer Class rate structure.

“Given the factors involved to implement Budget-Based Tiered Rates and

research conducted, it is the opinion of staff and Raftelis that the Tiered by Customer Class rate structure currently provides the optimal structure to continue to promote water conservation through pricing signals to the customer in addition to being compliant with legal requirements for being cost-based and provides the lowest implementation and maintenance cost for Pasadena ratepayers,” the staff stated in a previous report.

“Pasadena’s current tiered rate structure allocates water based on meter size, regardless of customer class. Budget-Based Tiered Rates allocate water budgets based on customer indoor and outdoor needs. The tiered rate structure by customer class incorporates elements of both Pasadena’s current tiered rate structure and Budget-Based Tiered Rates,” the report added.

The item is scheduled to come to the City Council next month.

At a previous meeting, two committee members said they supported budget-based pricing.

“I do think the budget-based pricing is the best way to show conservation,” said Councilmember Tyron Hampton. “I would be supportive of moving forward with a budget-based pricing this time around.”

“I like Budget-Based pricing. I think it conserves the most water,” said Councilmember Justin Jones.

Budget-Based Tiered Rates are tailored to each customer account, according to PWP.