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Pasadena Water and Power Proposes Comprehensive Electric Rate Study

Published on Monday, April 22, 2024 | 5:00 am

Pasadena Water and Power is proposing a comprehensive electric rate study that could lead to a realignment of customer rates with changing customer usage patterns, available technology, and other evolving aspects of the utility industry.

It is recommending, through the Municipal Services Committee, that the Pasadena City Council approve a contract between the City Manager and NewGen Strategies and Solutions, LLC. The contract will task NewGen with building a tailored financial forecast model for PWP to utilize in fiscal year 2026 and beyond for rate and revenue requirement projections.

The proposal will be discussed at the meeting of the Municipal Services Committee on Tuesday, April 23 before it is taken up at the full City Council meeting in early May.

Electric utilities periodically undertake such studies to ensure rates reflect evolving industry dynamics. PWP last conducted a comprehensive electric rate study in 2014, resulting in adjustments to the rate structure. The proposed study is driven by the need to adapt to modern trends and align rates with the city’s forward-thinking policy goals, including a resolution to transition to 100% Carbon-Free Energy by 2030.

“The purpose of this electric rate study is to develop a rate design and restructuring proposal that ensures revenue adequacy and fair and reasonable allocation of costs while balancing customer affordability and impacts to customers,” PWP said in an Agenda Report. “Rate design is accomplished through the development of a financial model, which is a tool used to dynamically analyze financial scenarios to guide decision-making.”

PWP indicated that they expect to develop a rate design and restructuring proposal that ensures revenue adequacy and fair allocation of costs, while considering customer affordability. The proposed rate study will integrate seamlessly with PWP’s clean energy transition efforts and other ongoing initiatives.

NewGen Strategies and Solutions, LLC, a management and economic consulting firm specializing in serving the utility industry, emerged as the preferred choice following a competitive selection process. The firm’s expertise in electric cost-of-service analysis and rate design studies, coupled with its experience in the Southern California market, positioned it as the frontrunner for the project.

The proposed contract with NewGen Strategies and Solutions, LLC, amounts to $258,042, with provisions for necessary change orders. Funding for the project will be drawn from the Power Operating Fund, with no anticipated impacts on other operational programs or capital projects.

Once approved by the City Council, the electric rate study is expected to start promptly, and will include activities to engage stakeholders and the community to ensure the issues are widely understood and the proposed adjustments acceptable.

Tuesday’s meeting of the Municipal Services Committee is open to the public and begins at 4 p.m. Meetings are held in the City Council Chamber, Room S249 at City Hall.

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