Proposed Sewer Rate Increase Back Before City Council

A proposed rate hike to the sewer use fee rate is scheduled to once again come to the City Council on Monday, May 6.

The item was previously heard on April 8 but tabled so that it could come back with more models and how they impact residents, as well as details on how additional proposed rate hikes to water and refuse will also impact residents.

The proposed “Revised Rate” structure would raise the average residential monthly sewer use fee from $4.55 to $11.05, marking the first time the City has suggested an increase beyond the consumer price index since 2007.

However, since the 2007 increase, the City has struggled with aging infrastructure in the sewer system and has delayed capital improvement projects to try and keep basic operations underway. The increase would go into effect in July or soon thereafter.

The City owns and operates a sewer wastewater collection system that serves approximately 140,000 residents and the City’s commercial users. The sewer system includes approximately 325 miles of sewer pipelines, three pump stations, and approximately 7,430 manholes. To help balance the fund and maintain service levels over the last few years, needed capital improvements have been deferred and the Sewer Fund operating reserve balance has been depleted.

Citywide, approximately 80% of the City’s sewer pipelines are over 80 years old and most of the system, 89%, is constructed of Vitrified Clay Pipe (VCP). The estimated lifespan of VCP pipe is anywhere from 60 to 100 years and is primarily a function of proper and timely maintenance.

The Agenda Report presented different rate scenarios, including an “Operations Only (no CIP, no reserve)” scenario; an “Operations + $3.5M CIP + No Reserve” scenario; the recommended “Revised Proposed: Operations + $3.5M CIP + Reserve Starting at $0 in FY 2025” scenario; and an “Operations + $5.15M CIP + Reserve Starting at $0 in FY 2025” scenario. 

A “Smoothing Option” with incremental increases in CIP funding was also modeled.

Each dollar increase by local residents would lead to $700,000 annually in revenue, but the City needs about $4 million, which is why it needs a substantial increase.

The last time the item came up, Vice Mayor Steve Madison questioned Pasadena Water and Power’s use of its budget. The Council approves the budget, and departments are required to come back to the City Council for budget amendments. Madison said the department’s numbers were not adding up and emphasized monies were supposed to be in the required account.

The city needs approximately $7.6 million annually to fully fund the sewer collection program. However, the City currently collects only $3.9 million on average each year. 

The current sewer use fee is based on the consumers’ water use, which is considered proportional to the sewer system’s wastewater discharge. That methodology has been used since the fee was established.

The long-term statewide drought conditions and water conservation efforts have impacted the amount of sewer use fees collected over the last ten years, and as a result, the City has not kept up with the cost of maintaining Pasadena’s aging infrastructure, according to a City staff report.

The fixed charges include 52% of collection-related costs that are fixed and do not vary with flow. The proposed rate for single-family residences is a fixed monthly rate of $6.00 plus a volumetric rate of $0.63 per hundred cubic feet. Single-family residence water use is capped at 13 hundred cubic feet per month, which assumes that water usage above 13 hundred cubic feet is for irrigation and therefore does not go into the sewer collection system.

However, the utility cost index has almost doubled since 2020 compared to general inflation increases and continues to rise. The cost of maintaining the sewer collection system has increased significantly.