City Council

5. MUNICIPAL SERVICES COMMITTEE: DIRECT THE CITY ATTORNEY TO PREPARE AN ORDINANCE AMENDING PASADENA MUNICIPAL CODE CHAPTER 13.04 TO REMOVE STRANDED INVESTMENT CHARGE AND RESERVES AND TO INCLUDE A WORKING CAPITAL RESERVE TARGET WITHIN 60 DAYS (Water & Power Dept.) Recommendation: It is recommended that the City Council: (1) Find that the action proposed in the agenda report is not a “project” subject to the California Environmental Quality Act (CEQA) pursuant to California Public Resources Code Section 21065 and within the meaning of State CEQA Guidelines Section 15378(b); and (2) Direct the City Attorney to prepare an ordinance, and return within 60 days, amending Pasadena Municipal Code (“PMC”) Chapter 13.04, the light and power rate ordinance to: a. Amend Section 13.04.173 – Power cost adjustment. b. Amend Section 13.04.175 – Reserve for stranded investment and change title to “Reserve for working capital”; and, c. Remove 13.04.176 – Stranded investment surcharge. Recommendation of the Municipal Services Committee (MSC): On February 11, 2025, the MSC approved the staff recommendation to direct the City Attorney’s Office to prepare an ordinance to amend PMC 13.04; the code change would create a working capital reserve target policy. Staff received guidance to also create a minimum level for reserves to establish the point at which reserve levels would be detrimental to the operations of the utility. The basis for a minimum is recommended to be 60 days, as compared to 90 days for the target, for liquidity reserve for operating expenses (2) the market reserve category, and (3) the contingency risk category. Given that the current minimum reserve level within the City’s Fund Balance Reserve Policy for the Light and Power Fund is 60 days of operating expenses, this recommendation is consistent with adopted policy. The revision to the code would also acknowledge that there are many other risks that the utility faces that require sufficient working capital in a rapidly changing industry and world City Council