SHAPING PASADENA’S FUTURE · target for calendar year 20 12 by achieving a Renewable ... by the...

SHAPING PASADENA’S FUTUREA legacy of reliable electric and water services

2013ANNUALREPORT

1881First wells drilled in Pasadena

1886Pasadena incorpo-rated as a city

1899Edison acquiresLight and PowerCompany ofPasadena

1941First delivery of Colorado Riverwater to Pasadena

1949Raymond Basin Adjudication resolves waterrights and ground-water managementof the aquifer

195545,000-kW Broad-way Power PlantUnit 1 is placed intoservice (followed byUnit 2 in 1957, and70,000-kW Unit 3 in 1965)

1920Citizens vote to acquire Edison’ssystem; Pasadenatakes over operation

1928Metropolitan WaterDistrict of SouthernCalifornia incorpo-rated; 1st boardmeeting held inPasadena

1934Morris Dam completed, afterPasadena wins access to SanGabriel River water in 1928

1937Electricity becomesavailable from thepower plant atHoover Dam

1800s 1900 –30s 1940s – 50s

1906Voters approve bond measure to municipalize streetlighting, formingPasadena MunicipalLighting Works Department

1907Pasadena’s first generating unit, Glenarm PowerPlant Unit 1, beginsoperation (followedby units 2 to 9)

1912Pasadena’s Municipal Water Department is established

1914Water Department begins spreading program to capturegroundwater in theupper Arroyo Seco

Over 100 years of community-owned water and power

1975New GlenarmPower Plant units,26,000-kW GT-1and GT-2, begin operation

1986First operating unitsof Palo Verde Nuclear GeneratingStation (AZ) and Intermountain PowerProject (UT) providepower to Pasadena

1996Pasadena City Council votes to allowcompetition for thepurchase of electricity

1999Pasadena signs participating genera-tors agreements toparticipate in the California SystemOperator (CAISO)

2005PWP becomes a participating trans-mission owner (PTO)with CAISO

2006Pasadena celebrates100-year anniversaryof Power Division

2009Power Integrated Resource Plan isadopted (and updated in 2012)

City enhances watershortage and wasteordinance

Level 1 Water Shortage is declared

Plans are initiated for first reclaimed/recycled water project

PASADENA WATER AND POWER 2013 Annual Report

Timeline: Over 100 years of community-owned water and power

A Message from General Manager Phyllis E. Currie

Shaping Pasadena’s Future

Preparing for a Secure Future Legislative and Compliance:Issues & Impacts Power Resources & Infrastructure Water Resources & Infrastructure Water Centennial Pasadena Water and Power Today Conservation and Outreach Moving Forward

Financial Section

Independent Auditor’s Report Power Enterprise Fund

– Management’s Discussion and AnalysisWater Enterprise Fund

– Management’s Discussion and Analysis

Basic Financial StatementsStatement of Net Position Statement of Revenues, Expenses

and Changes in Net Position Statement of Cash Flows

Notes to Basic Financial Statements

Supplementary Information

PasadenaWater and Power ServicesPower System:Ten-Year Operations SummarySales ComparisonPower Data

Water System:Ten-Year Operations SummarySales ComparisonWater Data

Water and Power Systems:Pledged-Revenue Coverage

Directory

2223

2426

41

41

424344

454647

48

InsideBack

200220-year Water System Master Planis adopted

2003PWP signs 20-yearcontract for cleanwind power

New Power Plantunits, 45,000-kW GT-3 and GT-4, replace B1 and B2

200420-year Electric Distribution SystemMaster Plan isadopted

2000California power crisis

2001Integrated Resourceplan adopted to upgrade/replace localgeneration units

1967Municipal Light andPower and WaterDepartment mergeto form PasadenaWater and Power(PWP)

1971T.M. Goodrich Receiving Stationgoes into service

1960s – 70s 1980s – 90s 2000 – 10s

InsideFront

2

3

35678101113

14

1416

19

Contents

2010Geographic Informa-tion System (GIS) is implemented, providing advanceddata technology

2011Water Integrated Resource Plan is adopted

Monk Hill WaterTreatment Plan begins operation(leads to eventualreopening of 4 North-west Pasadena wells)

564-kW WindsorSolar project completed.

2012PWP power supplyreaches 24% renewable.

Pasadena celebrates100-year anniversaryof Water Department

During Fiscal Year 2013, the City of Pasadena enjoyed the privilege of celebrating an importantmilestone—the centennial of the Water Department. Along with the Power Department, whichreached its 100-year anniversary six years ago, the two operations have evolved into one strong municipal utility with a collective, ongoing commitment to provide Pasadena residents and busi-nesses with superior water and electric services at reasonable rates.

At this time in the history of Pasadena Water and Power (“PWP”), we gratefully acknowledge allthose who have contributed their efforts to making the utility a valuable community enterprise. Weare equally appreciative of the citizens and businesses of Pasadena, who have held their public utilityto high standards through the years.

Today’s challenges and issues are increasingly complex—requiring a long-range vision that addressessecurity and operational efficiency, legislative and environmental impacts, sustainable water supplies,renewable energy resources, and provides for the necessary funding of vital programs and projects.PWP is continually reassessing and updating its operational plans and programs to stay on trackwith long-term objectives.

PWP established specific energy and water supply plans, sustainability goals, and renewable energytargets through adoption of Integrated Resource Plans (“IRP”). PWP exceeded its renewable energytarget for calendar year 2012 by achieving a Renewable Portfolio Standard (“RPS”) of 24 percent.We achieved this goal by securing contracts for a variety of renewable energy resources, includingwind, solar, geothermal, and flourishing efficiency programs.

The strategy to reduce dependence on imported water has had notable success—water purchaseshave decreased for three consecutive years. In Fiscal Year 2013, PWP purchased five percent lesswater than the prior fiscal year. The Monk Hill Treatment Plant, in operation since July 2011, con-tributed significantly to the local groundwater supply and accounted for about one-third of the totalwater produced. In addition, a comprehensive strategy to encourage water conservation was boostedby the Turf Removal rebate program, which has doubled in customer participation since the pro-gram was initiated in Fiscal Year 2010. The program resulted in the removal of over 135,000 squarefeet of turf in Fiscal Year 2013, with savings of approximately 21 acre feet of water annually.

We continue to monitor and address cybersecurity and other issues of critical importance to the reliability of our local distribution system and the nation’s power delivery system. PWP successfullycompleted a comprehensive North American Electric Reliability Corporation (“NERC”) audit,whichverifies a utility’s ability to meet NERC’s operational and reliability standards.

Along with system reliability, an ongoing priority is emergency preparedness. PWP is in the processof implementing integrated technology that will improve outage management and communicationwith customers. The utility will also utilize valuable insights gained by the PWP crews that partici-pated in mutual aid efforts to restore power after the massive damage caused by Hurricane Sandy.

PWP generated approximately $248.6 million in operating revenues in Fiscal Year 2013. A total ofnearly $50.9 million was invested in capital projects with about $28.4 million directly related to theongoing water and power Master Plans of infrastructure improvement. PWP also contributed almost$17.8 million to the City’s General Fund to finance vital public services.

Our centennial year celebrations validate the importance of the partnership created between PWPand the community, and we look forward to serving Pasadena for the next 100 years and beyond. I sincerely appreciate the ongoing support of our customers, staff, and city leaders as we continue towork together to create a secure future with reliable, sustainable water and energy resources.

Phyllis E. Currie, General Manager

2 Pasadena Water and Power • 2013 Annual Report

A Message fromGeneral Manager Phyllis E. Currie

n November 2012, Pasadena Water & Power (“PWP”) proudly celebrated the centennial of its Water Department. Along with

the Power Department, which reached this important milestone in 2006, PWP continues to look toward the future while respect-fully acknowledging its past. The perseverance, remarkable contri-butions, and collective vision of many individuals throughout its history have made PWP what it is today—a model public utilitywith a legacy of reliable electric and water services that continuallyinvests back into the community.

With a strong foundation in place, an efficient business model,and responsible leadership, PWP is moving forward to help shapePasadena’s future for generations to come.

Preparing for a Secure FutureThe landscape in which municipal utilities in California operatecontinues to change. Regulatory requirements are complex, opera-tional and compliance costs continue to rise, and rate pressures areincreasing. In ongoing efforts to ensure future sustainability, PWP

has initiated comprehensive planning efforts and is leveraging technology to achieve operational goals more efficiently.

PWP’s business decisions are driven by thecommunity’s current and future needs, by industry best practicesthat support a strong, dependable infrastructure, and by far-ranging, integrated strategies that allow the utility to adapt to economic and market uncertainties.

3Pasadena Water and Power • 2013 Annual Report

From its agricultural origins in the late 1800s to today, Pasadena has relied on dependable electricityand water supplies to meet the community’s needs. A drought in 1898 alerted Pasadena residents ofthe need for a reliable water supply and distribution system, while inadequate electric service at theturn of the century prompted the city’s venture into the street lighting business. By 1912, the municipalutility was offering both electric and water services to its customers.

In the 100-year time span from 1914 to 2013, PWP’s water and power service capabilities have evolveddramatically and now serve the comprehensive needs of a diverse and culturally rich world-class city.

Pasadena & PWP…Then and Now

SHAPING PASADENA’S FUTUREA legacy of reliable electric and water services

1914 2013

Pasadena Population* 36,300 140,020

Power Sold (MWh) 4,737 1,127,252

Power Poles (# of poles) 5,592 11,313

Power Rates** (per kWh – residential only) $0.05 $0.16

Water Mains (# of miles) 186 508

Water Consumption (billing units sold) 20,436 13,169,871

Water Rates (inside Pasadena – rate per billing unit) $0.18 $4.11

*Estimates based on closest Census periods and projections.**1914 Rates – Lighting: $0.05/kWh; Power: $0.04/kWh.PWP data applies to fiscal years.

I


Emergency Preparedness

Integrated technology improves outage responseExtreme weather that disrupts water and electric services canhappen at any time and PWP is continually exploring strategiesto improve emergency response. Timely action and efficient customer communication are primary goals during service interruptions and outages.

PWP initiated a multi-year project that was approved by CityCouncil in April 2013 and will integrate technology to expeditetroubleshooting and deployment of personnel, make repairs, and allow PWP to disseminate timely information and outage updates to the public. The project includes new outage manage-ment (“OMS”) and integrated interactive voice response (“IVR”) systems, upgrades to the power distribution supervisory controland data acquisition (“SCADA”) system, and improvements to thegeographic information system (“GIS”). The OMS is scheduled tolaunch by mid 2014.

Mutual Aid

PWP helps New York power up after Hurricane SandyWhen disaster struck the Northeast in the form of HurricaneSandy in November 2012, PWP crews provided assistance in the enormous effort to restore power to the area. Six PWP employees and three trucks—along with mutual aid teams frommunicipal utilities in Anaheim, Burbank, Los Angeles, and Riverside—arrived in New York to find 95% of the region withoutpower. Line crews, tree trimmers, and fleet support personnelworked long hours under difficult conditions to get the job done.

PWP gained valuable insight that it is applying to its own emergency preparedness plan including the importance of first assessments, which initiate everything from customer communication, to estimating outage times, to assemblingneeded materials and resources. PWP also has mutual-aidagreements in place with various agencies, including the American Public Power Association.

EMERGENCY RESPONSEPWP’s leadership is strongly focused on delivering reliable, competitively priced water and power services and increasing investment in sustainable, renewable resources. These strategies include:

� Creating a series of operational and strategic plans to achieve the utility’s long-term objectives: 4Water and power plans for infrastructure investment to

increase system efficiency and reliability: −20-year Electric Distribution System Master Plan −18-year Water Distribution System Master Plan4Energy Integrated Resource Plan (“IRP”) to address

renewable energy goals, new regulatory requirements, and changing power market conditions4Water Integrated Resource Plan (“WIRP”) and the Urban

Water Management Plan that work in concert with WIRP goals for water supply

45-year Information Technology Strategic Plan to leverage the benefits of technology investment4Geographic Information System (“GIS”) network to

effectively capture and manage asset data, and achieve cost efficiencies and performance goals

� Establishing a Legislative and Regulatory Affairs program that optimizes existing legislative efforts to advance environmentally and socially responsible legislation and policies.

� Investing in the development of a new, natural gas-fueled power plant that will greatly improve local power generation, augment energy efficiency and renewable energy goals, reduce greenhouse gas emissions, and decrease reliance on external energy sources.

� Developing a multi-faceted approach to water supply and conservation. Efforts include ongoing investment in water infrastructure upgrades to enhance system reliability; water treatment, recapture, and recycling projects to expand local groundwater supply and reduce dependence on imported water; water regulations and tiered rate structures that impact and encourage water conservation habits; and comprehensive public outreach. PWP offers generous rebates for water- efficient devices and outdoor water conservation to advance progress inmeeting city and statewide water conservation goals.

� Developing a strong plan for energy efficiency and environmental responsibility. Demand-side management activities such as free energy audits, home energy reports, and a comprehensive rebate program, reduce energy use and save customers significant money on their energy bills. PWP has consistently adopted and implemented aggressive energy efficiency goals, achieving a cumulative energy savings of 6.1% of retail sales for the five fiscal years from 2008 to 2012. PWP is also committed to reducing environmental impacts through projects that support clean energy and transportation technology.


Water Bonds. In February, 2013, a joint hearing was held to dis-cuss whether to proceed with plans to place an $11.1 billion waterbond before voters in November 2014 (SB x7 2). Concerns overthe high cost of this bond have resulted in two new proposals thatare being considered by the legislature – AB 1331 (Rendon), andSB 42 (Wolk), legislation that would reduce the bond amount toapproximately $6.5 billion. The water bond remains a top priorityfor PWP, as we work to ensure PWP’s eligibility to compete forfunding for Pasadena’s water infrastructure improvements and recycled water project.

Water Quality Regulations. A proposed maximum contaminantlevel (MCL) of 10 parts per billion (ppb) would make Californiathe first state in the nation to have a limit on Chromium-6, whichcan occur naturally in groundwater. PWP’s wells are currently operating below the proposed 10 ppb threshold and would not be impacted by this proposal in its present form. However, wecontinue to monitor this issue as the proposal moves through theregulatory process.

Water Quality Control. Proposed legislation would move respon-sibility for California’s drinking water program from the Depart-ment of Public Health (“DPH”) to a new division within the State Water Resources Control Board (“SWRCB”). PWP andother water agencies are monitoring this proposal.

Public Power Risk Management Act of 2013.House Resolu-tion 1038 (“HR 1038”), which passed in June 2013 and was supported by PWP, removes potentially burdensome registrationrequirements for entities that engage in utility operations-relatedenergy commodity swap transactions with municipal utilities. HR1038 encourages business between investor-owned and public utilities, ultimately resulting in reduced energy costs to ratepayers.

Successful NERC Audit

As part of a vast network of interconnected power utilities, PWPcompletes periodic audits that ensure it meets high standards forequipment, operations, and reliability. In March 2013, PWP successfully completed its first comprehensive audit of NorthAmerican Electric Reliability Corporation ("NERC") standards for reliability of the electric grid. Hundreds of documents, proce-dures, and maintenance records were submitted as evidence ofcompliance with over 450 NERC reliability standards and morethan 1,200 requirements. PWP’s next scheduled audit is in 2019.

20110%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2012 2013 2014 2015 2016Calendar Year

2017 2018 2019 2020

24.5

%

24.6

%

25.0

%

18.3

%

21.3

%

27.1

%

23.6

%

23.9

%

24.3

%

24.7

%

Actual Supply/Existing Contracts

State Mandatory RPS Goal

Pasadena Voluntary RPS Goal

% o

f Loa

d

PWP RENEWABLE PORTFOLIO STANDARD(RPS as percentage of load)

� Supplying actionable targets that support Pasadena’s efforts to be recognized as a “green city” that offers its residents a high quality of life in an environmentally responsible and sustainable community. The Green City Action Plan adopted in 2006 includes key PWP goals:

4Increase renewable energy resources to 40% by 20204Reduce greenhouse gas emissions (GHG) 40% by 2 0204Reduce per capita water consumption 20% by 2020

PWP Today and Tomorrowu Responsive to community needsu Flexibility to create innovative solutionsu Committed to a sustainable city

Legislation and Compliance: Issues & ImpactsPWP is actively engaged in tracking legislation and voicing concerns on behalf of the utility and its customers on issues that impact municipal water and power utilities and their stakeholders.During Fiscal Year 2013, PWP tracked, monitored,and took actionwhen appropriate on over 200 state and 40 federal legislative billsas well as policy issues related to cybersecurity, hydropower devel-opment, and various environmental and energy regulations. Onlyone of the bills that PWP opposed at the start of the year wassigned into law (AB 792).While this bill poses no direct fiscal impact to Pasadena, we oppose legislation where the state usurpslocal control from Pasadena’s elected officials. All other bills ofconcern were either amended or stalled for the year.

Ongoing issues of focus include:

Cybersecurity. PWP supports existing Federal Energy RegulatoryCommission (“FERC”) and North American Electric ReliabilityCorporation (“NERC”) models for developing mandatory cyber-security standards, and has advocated for legislation to provideutilities with timely, actionable information about threats and address issues of sharing highly sensitive information.

Hydraulic Fracturing. The environmental impacts of hydraulicfracturing (“fracking”) continue to be debated across the state andthroughout the nation. PWP acknowledges the critical role thatnatural gas fracking plays in renewable energy generation and dis-placement of higher-emitting generation resources, and supports responsible, transparent fracking requirements that consider public health, the groundwater supply, and the environment.


Power Resources & InfrastructureAs a public utility, PWP continually explores strategies that willenable it to respond to ongoing challenges as the power industryevolves, implement system technology upgrades to supply thecommunity with reliable power, and operate a cost-effective, environmentally responsible power system.

In calendar year 2012, PWP exceeded the IRP renewable target of 20% and achieved a Renewable Portfolio Standard of 24%. In addition, PWP exceeded the Pasadena Green City Action goal ofusing renewable energy to meet 10% of the City’s peak electricityload by 2012.

Ongoing challenges include legislative and regulatory uncertain-ties, particularly those impacting the renewable portfolio standardand greenhouse gas (“GHG”) cap and trade regulations. The California Independent System Operator (“CAISO”) is consider-ing several initiatives that may affect PWP revenues and expenses,such as the development of capacity and energy imbalance mar-kets, and renewable energy transmission expansion. PWP will continue to meet its compliance goals while remaining mindful of the impacts to ratepayers.

ARB Cap and Trade ProgramBeginning in 2013, PWP participated in the quarterly auctions of California's Cap and Trade Program to meet the emission reduction requirements administered by the California Air Resources Board (“CARB”). Challenges going forward are based on market uncertainty; as more sources become subject to the program, there are no guarantees of allowance market liquidity or low prices. In December 2012, the Federal Energy RegulatoryCommission (“FERC”) approved a CAISO tariff amendment that allows PWP to cover its carbon obligation with administrativelyallocated allowances when tax-exempt financed generation resources are used to serve native load. This considerably reducesPWP’s market exposure risk under GHG regulations and the Cap and Trade Program.

New Renewable ContractIn Fiscal Year 2013, PWP executed a Power Sales Agreement for the purchase of a 13 MW (of 40 MW total) share of the Martifer/Silverado solar generation project, which will be con-structed in Lancaster, California. Deliveries of solar power are expected to commence in 2015.

SCPPA AgreementPWP has executed a new Renewables Development Agreementwith the Southern California Public Power Association (“SCPPA”),which enables PWP to take advantage of SCPPA’s legal, regulatory,and legislative resources when negotiating renewable energy contracts.

CY CY Current ContractRenewable Resources 20131 20141 Status Type

RENEWABLE ENERGY PORTFOLIO SUMMARY – CURRENT(GWh per year)

RENEWABLE POWER RESOURCES – HISTORICAL

HYDROPOWERAzusa Hydro

WINDIberdrola Renewables

Milford 1

LANDFILL GASFortistar Methane

Ameresco Chiquita Canyon

GEOTHERMALOrmat

SOLARWindsor Reservoir Solar

Silverado/Martifer Solar

Projects3

BIO-METHANEEDF

Sequent

Waste Management

SHORT TERMShort Term RECs4

Total Renewable

Retail Sales

% Renewable

% IRP Renewable Target5

1Forecast only CY=calendar year2Southern California Public Power Authority 3Silverado/Martifer Solar Projects are new renewable contracts that PWP signed in FY 20134Renewable Energy Credits5Pro-rated interim target

0%

5%

10%

15%

20%

25%

30%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

WindSolar*Small HydroelectricGeothermalBiomass & Waste

*Solar represents <1% of the renewable energy mix each year.

Online

Online

Online

Online

Online

Online

Online

Under Development

Online

Online

Online

Online

PWP

PWP

SCPPA2

PWP

SCPPA

SCPPA

PWP

SCPPA

PWP

PWP

PWP

PWP

4.1

15.5

11.2

42.036.6

16.3

0.99

2.66

12.0

20.9

36.9

81.2

280.4

1,133

24.7%

25.0%

0

14.6

8.5

42.4

40.5

15.7

0.99

0

14.9

31.5

46.0

77.2

292.2

1,131

25.8%

22.5%

Next IRP goal:40% by 2020

PROGRESS REPORT: Power System

New Glenarm Power Plant. In April 2013, the City Council approved the final Environmental Impact Report, paving the wayfor a new, state-of-the-art 71-megawatt combined-cycle natural gasunit to replace the existing Broadway B-3 steam-generating unit.The gas unit is expected to generate power approximately 30


percent more efficiently, provide an environmentally safe energysource, and augment the reliability of the city’s electrical system.The air permit was issued by South Coast Air Quality Manage-ment District in August 2013, and a contract for equipment hasbeen executed. Completion of the project is currently scheduledfor Fiscal Year 2016.

Power Plant Gas Turbines. After being out of service almostthree years due to fire damage, Gas Turbine 1 resumed operationin September 2013. In addition, PWP is currently addressing options to repair or replace Gas Turbine 2, which experienced a similar failure in October 2012.

Energy Trading System. PWP has begun implementing its comprehensive new energy trading, scheduling, and settlementssystem. Pasadena-specific configuration of the new system was implemented in late 2013, with additional customization due bythe second quarter of 2014. Consolidating multiple functions intoone system allows PWP to more efficiently manage the entirepower supply lifecycle.

Electric Cost of Service Study (“ECOS”).The ECOS was initi-ated in April 2012 and completed in June 2013. PWP is now reviewing the study’s recommendations to design a rate structurethat both captures adequate revenue for future system improve-ments and provides customers with competitive rates. Findingswill be presented to Pasadena City Council in Fiscal Year 2014.

Power Master Plan Highlights – $17.1M Investment In Fiscal Year 2013, ongoing work to achieve the objectives of theElectric Distribution System Master Plan resulted in almost 500new or upgraded residential and commercial services. Projects inthe Power Capital Improvement Program (“CIP”) included:

� Completion of the Hastings substation upgrade with the installation of a new 17kV transformer and switchgear

� Conversion of nine circuit segments from 4kV to 17kV � Expansion of the 17kV underground infrastructure in the Hastings Ranch area

� Installation of a new 34kV line between T.M. Goodrich and Hastings substations

� Development of a new outage management and communication system

0%

5%

10%

15%

20%

25%

FY2009 FY2010 FY2011 FY2012 FY2013

$21.

2

$22.

8

$12.

8

$12.

0

$17.

1

ACTUAL EXPENDITURESPower Master Plan Projects

(in millions)

Water Resources & InfrastructureCalifornia’s water future is at a critical juncture as it faces the challenges of an aging infrastructure system and the reality of declining water exports from the Sacramento-San Joaquin RiverDelta. The protection and restoration of the Delta eco-system haslimited pumping operations and reduced water delivery to Cali-fornia water agencies by 700,000 acre-feet between November2012 and January 2013. In 2013, California also experienced thedriest January and February in history. A final snow survey in May2013 measured snowpack at only 17% of normal levels. Whilethese issues did not significantly impact PWP water supplies in2013, both PWP and the Metropolitan Water District ("MWD")are working diligently to put strategies in place that ensure adequate supply in the future.

PWP’s water supply strategy encompasses a wide range of con-servation efforts and customer rebates along with projects to maximize local groundwater supply. Since the Monk Hill Treat-ment Plant and disinfection facility began treating groundwatercontamination in July 2011, four wells have been reopened to augment local groundwater supply. In Fiscal Year 2013, MonkHill contributed almost 34% to the total groundwater produced.PWP is making ongoing progress to reduce its dependence on imported water and purchased over 5% less water than the priorfiscal year.

PWP Sells Excess GroundwaterWhile the Monk Hill Water Treatment Plant was under con-struction, PWP temporarily stored water in the Raymond Basin.Approximately 5,000 acre-feet that were not used by PWP will be recouped via sale of excess groundwater through 1-year waterlease agreements with three neighboring water agencies.

Groundwater Imported Fiscal from Wells from MWDYear (%) (%)

2009 36.2 63.8

2010 36.2 63.8

2011 36.6 63.4

2012 41.2 58.8

2013 44.6 55.5

PURCHASED VS. LOCAL WATER SUPPLY


PWP achieved a major milestone in 2012, celebrating its centennial and a legacy of reliable water supply and delivery that has allowed Pasadena to flourish for100 years.

Beginning in May and continuing through November(the official centennial month), PWP and other commu-nity leaders hosted a series of centennial-relatedevents and exhibits that showcased the city’s waterhistory and explored the Water Department’s crucialrole in the quality of life of Pasadena’s citizens.

From the first irrigation ditches and enclosed pipelines,to the sophisticated technology and conservationfocus of today, water has been an essential ingredientin the community’s growth. PWP now serves nearly176,000 customers through a complex 23-square-milewater system of wells, reservoirs, and pipelines.

WATER CENTENNIALmakes a splash in 2012

New Eastside Well Collector Links Wells to ReservoirPWP is constructing a 4-mile pipeline that is expected to be com-pleted by December 2013 and will link five groundwater wells to Jones Reservoir. The new pipeline will allow disinfected waterfrom each well to be collected in the reservoir prior to blendingwith MWD-acquired water to provide more consistent water quality. In line with PWP’s overall strategy to convert water disin-fection systems from chlorine to chloramines, a new disinfectionsystem at the Jones Reservoir site is also planned to treat the waterbefore it enters the reservoir.

PROGRESS REPORT: Water System

Water Runoff Capture.With the help of $3.2 million in fundingfrom Proposition 84 and in partnerships with the Arroyo SecoFoundation, L.A. County Flood Control District, and CaliforniaDepartment of Water Resources, PWP is replenishing its under-ground resources by upgrading the stream intake structure andspreading basins in the Upper Arroyo to increase the capture andstorage of more mountain runoff in the city’s groundwater table.The project, which is currently underway and continues through2015, will also restore native foliage, improve the fish habitat, and upgrade public facilities.

Recycled Water. PWP’s recycled water program to provide a sus-tainable source for irrigating public landscaped areas is currentlymoving through the design stage and required Environmental Impact Report. PWP is exploring financing opportunities for theapproximately $15 to $18 million cost for Phase 1, which isscheduled to begin construction in 2015.

Water Rate Adjustments. In a June 2013 public hearing, PWPcustomers were invited to comment on proposed water rate adjustments that address fluctuating water costs. The PurchasedWater Adjustment Charge (“PWAC”) increases, which are sched-uled for October 2013 and 2014, are in response to the rising costof water purchased from MWD.

Water Master Plan Highlights – $11.3M InvestmentIn Fiscal Year 2013, PWP made progress implementing the WaterDistribution System Master Plan objectives and Water IntegratedResource Plan recommendations. Projects in the Water CapitalImprovement Program (several of which are funded by BuildAmerica Bonds) included:

� Completion of seismic upgrades to the Sheldon reservoirs� Completion of electrical upgrades to the core of PWP’s pumping system� Installation of an ammonia tank at the new disinfection facility that supports Windsor Reservoir� Replacement of about 3.5 miles of aging water mains � Replacement of approximately 600 water meters with new Automated Meter Read devices

0%

2%

4%

6%

8%

10%

12%

14%

21.2

%

FY2009 FY2010 FY2011 FY2012 FY2013

$12.

2

$11.

3

$9.1

$7.7

$7.4

ACTUAL EXPENDITURESWater Master Plan Projects

(in millions)


1 9 1 2 − 2 01

2

100PASADENAWATER CENTENNIAL

YEARS100

STATE-OF-THE-ART TECHNOLOGY captures data on the entire water system to:

� Make resource planning and water distribution more effective and efficient

� Create safer working conditions for water crews

� Ensure safe drinking water by completing 30,000 water quality tests every year

VISION STATEMENTPWP will be a valued community asset, an

exceptional employer, a partner in Pasadena’sprosperous future, and contribute to the

quality of life in Pasadena.

MISSION STATEMENTPWP is committed to providing safe and reliable water and power with superior customer service at reasonable rates.

COMMUNITY & CUSTOMER FOCUS

SAFETY

SUSTAINABILITY

ACCOUNTABILITY

DEDICATION

HONESTY & INTEGRITY

INNOVATION

PWP CORE VALUES


40%

54.7%

795

10

Pasadena Water and Power TodayBoth the water and power systems have delivery capabilities tomeet Pasadena’s diverse and evolving needs. PWP has a history ofeffectively working in conjunction with the community to achieveenergy efficiency and water conservation goals.

The water system’s reputation for reliability is reinforced by ad-vanced technology that gathers data to monitor and track waterusage and water quality, maintain adequate reservoir levels, andquickly dispatch repair crews. Conservation programs and incen-tives have been successful in reducing water consumption, andPWP has implemented a long-term strategy to effectively managethe city’s water supply under conditions such as drought, pumpingrestrictions on purchased water, and dwindling groundwater. Thewater IRP, approved in 2011, is a detailed plan to achieve a sus-tainable and environmentally responsible water supply for the next 25 years.

PWP has taken steps to augment its capabilities for local powergeneration, and is committed to ongoing investment in infrastruc-ture, security, and state-of-the-art technology to enhance the efficiency and reliability of the power system. The utility’s IRP(updated in 2012) focuses on achieving a sustainable balanceamong critical objectives of system reliability, fiscal responsibility,and environmental stewardship.

Notable Targets & SuccessesRPS by 2020

PWP has set an aggressive renewable portfolio standard (“RPS”) goal that substantially exceeds California’s SBX1-2 mandate of 33% by 2020 for publicly owned utilities.

increase in renewable energy (5-year period, 2009-13)PWP is committed to investing in renewable resources such aslandfill gas, geothermal, bio-methane, wind, hydropower, andsolar, and continues to focus on increasing its RPS.

acre-feet of water saved (5-year period, 2009-13)

PWP’s water programs and rebates support conservation prac-tices that will help PWP meet (and exceed) the Urban Environ-mental Accords water conservation target of 10% reduction inwater consumption by 2015, and 20% by 2020.

million+ gallons saved through landscape rebate program

Since it was initiated in Fiscal Year 2010, PWP’s Turf Removal Program has helped customers reduce outdoor water costs by replacing water-thirsty lawns. Over 150 customers have partici-pated in the increasingly popular rebate program.


Conservation and OutreachPWP’s community-wide outreach efforts provide a comprehensiverange of options and tools to save money and efficiently manageenergy and water use. Workshops for residents and businesses,community educational events, online tools, and multi-mediacampaigns all help to promote water and energy conservation.

Fiscal Year 2013 events included the popular Pasadena Earth &Arts Festival, Public Power Day, Water Awareness Month, and aseries of community events, exhibits, and water symposiums inconjunction with the Water Department’s centennial celebration.

For PWP, educating and empowering its young citizens is an on-going commitment. In Fiscal Year 2013, PWP’s youth outreachincluded several programs for elementary students including theGreen Living Curriculum Pilot Program; support for Children Investigate the Environment; courses on conservation, renewableenergy, and recycling; a Water Awareness Day field trip to JonesReservoir; and presentations on water conservation by OutwardBound students. Public Power Day provided an opportunity forPasadena’s middle and high school students to enjoy a tour of thePower Plant.

Student Art Contest

“Water Is Life” theme promotes conservationPWP celebrated Water Awareness Month by inviting studentscitywide to participate in the 2013 Water Is Life art contest. Creative imaginations culminated in five finalists who submitted12”x18” posters with a water conservation theme. The winningposter was created by a third-grade student at Don Benito Fundamental School.

WATER IS LIFE

Students tour the Power Plant on Public Power Day.

PWP’s annual Water Awareness Day provides students with the opportunityto learn about water delivery and conservation.

Muir Ranch at High School

Turf transforms into source of new lifeA patch of ordinary turf on the grounds of John Muir High School gained new life as a productive source of organic fruitsand vegetables with the help of grants, donations, and a $5,000rebate through PWP’s Turf Removal Program. PWP also helpedMuir students install an automated, low volume, point-source irrigation system to use water efficiently.

The 2-acre farm site known as Muir Ranch generates multiplebenefits: a source of healthy produce for the school cafeteria,hands-on learning experiences for students, and income from the sale of fruits and vegetables to the community. Energy efficiency and water conservation are continuing, including a project in partnership with Caltech to devise a solar-powered cooler for storing produce.

0

10

20

30

40

50

60

70

80

90

FY2009

GWh

per y

ear

FY2010 FY2011 FY2012 FY2013

$6,7

88

$11,

206

$14,

355

$17,

474

$20,

421


Residential/Low Income:u Over $1.6 million (in cash rebates, direct installs, rate

assistance, and energy services)u Over 3,800 MWh savedu Over 0.3 MW reduction in peak demandPrograms: Energy Star, Efficient Cooling, Cool Trees, Refrigerator Retirement, Pool Pump rebate programs, online and on-site audits

Pasadena Solar Initiative (PSI):u $1.9 million in rebates u 104 solar installations for commercial

and residential customers u 0.57 MW total capacity

Rebate programs for water customers in Fiscal Year 2013 included:

Residential and Commercial/Multifamily:

Water efficiency devicesu Over $74,000 in rebatesu 972 devices installedu Estimated water savings of 42 acre feet annuallyPrograms: SoCalWaterSmart; WeDIP

Water-wise landscapingu 135,000 square feet of turf removedu Over 21 acre-feet of water saved annuallyProgram: Turf Removal

Renewable Energy and Water Conservation Pay OffCustomers are experiencing the benefits of PWP’s Pasadena SolarPower Initiative (“PSI”), through which hundreds of homeownershave installed rooftop solar systems that produce a combinedmegawatt of power every day. The result is lower energy bills andless strain on the city’s power grid, as well as compensation to cus-tomers for any unused, surplus power generated by their units.

Up to half of California’s urban water use takes place outdoors, a fact that underscores the importance of outdoor water conser-vation. Since PWP’s Turf Removal Program was launched in Fiscal Year 2010, participation has more than doubled. An annualestimated 21 acre-feet of water is saved annually through the re-placement of traditional lawns with water-wise landscaping. Thepopular program resumes in fall 2013 with increased rebates forqualifying commercial projects.

Rebate Program HighlightsOverall, water and power customers earned rebates totaling over$5.2 million through PWP programs in Fiscal Year 2013. Late inthe fiscal year, PWP introduced the Pasadena Express EfficiencyProgram (“PEER”) to commercial customers, which provides fastrebates up to 50% of the cost (up to $100,000 per year) for energyefficiency measures through a streamlined process that does not require a PWP project analysis. The program, intended for quali-fying small-business customers, is expected to help Pasadenaachieve its goal of cutting citywide energy use by one percent each year through 2023.

Rebate programs for power customers in Fiscal Year 2013 included:

Commercial:u Over $1.61 million (in rebates and direct installs)u Over 8,377 MWh savedu Over 1.2 MW reduction in peak demandPrograms: Energy Efficient Partnering (“EEP”), WeDIP

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20132010 2011 20120

1,000

2,000

3,000

4,000

5,000

100

0

200

300

400

500

CUMULATIVE SOLAR POWER INSTALLATIONS

CUMULATIVE ENERGY EFFICIENCY & EXPENDITURES(Rebates, Direct Installs, Low-Income Energy

Efficiency Programs Only)

PSI GOAL Install 14 MW of solar power

by 2017

100

0

200

300

400

500

600

700

800

900

Acr

e-fe

et p

er y

ear

FY2009 FY2010 FY2011 FY2012 FY2013

CUMULATIVE WATER SAVED

($ in thousands)# of Applications

kW Installed

Fiscal Year


PWP once again earned a series of awards in its ongoing commitment to environmental responsibility, public outreach,and excellence in water and power delivery as well as financial reporting.

u 2012 Reliable Public Power Provider (RP3®) “Platinum” designation from the American Public Power Association(“APPA”), recognizing PWP’s proficiency in the four key areas of reliability, safety, workforce development,and system improvement; PWP, which alsoearned APPA’s “Gold” designation in 2011, isone of only 184 utilities nationwide to receivethe designation during the current 2-year cycle

PWP—OVER 100 YEARS STRONG

u Treeline USA Award from the National Arbor Day Foundation/National Association of State Foresters for protecting the city’s trees through responsible power line clearancepractices; PWP has now earned thisaward for 11 consecutive years

u Merit Award from APPA honoring the2012 Pasadena Water and Power Annual

Report for excellence in communications; PWP was one of11 public power utilities to receive awards of excellence or merit

PWP EARNS AWARDS

u 2012 Arroyo Verde Award from the ArroyoSeco Foundation for “Greening the Arroyo” by maximizing the ability to capture mountain runoff for the city and at the same time helpingto protect and enrich the historic canyon

Moving ForwardTechnology Moves Forward with ITSP and GISSince PWP introduced its 5-year Information Technology Strate-gic Plan in Fiscal Year 2012, three ITSP initiatives have been com-pleted and four more began in Fiscal Year 2013. The Plan, whichleverages technology to assist PWP in achieving its goals, will nextaddress high-priority projects for Enterprise Resource Planning,Outage Management, Robust Telephone/IVR capability, and the electric Supervisory, Control and Data Acquisition system. A majority of the projects are expected to be completed by June 2014.

In Fiscal Year 2013, PWP also deployed GO!Sync! mobile GIS,which is being utilized for tasks such as facility inspections andcritical infrastructure identification. In addition, a GIS update tothe water district maps was completed, making the data easier to read and utilize.

EVs and Time-of-Use Rates Gaining PopularityPWP is preparing for a growing electric vehicle (“EV”) market byupgrading vehicle charging stations in various city public parkingfacilities and accommodating EV owners with lower time-of-use(“TOU”) rates for charging vehicles during off-peak hours. As of June 30, 2013, there were 80 customers enrolled in the experi-mental TOU rate program, which was initiated in Fiscal Year 2012.

Online and Security Enhancements for CustomersIn Fiscal Year 2013, modifications were completed to the Interac-tive Voice Response/Interactive Web Response applications thatallow customers to start, stop, or transfer service; report electricand water outages; request payment extensions; and sign up foroutbound outage notifications. The upgrade provides enhancedsecurity for sensitive personal data, which is encrypted and placedin a secure server.

New Website Features Put Focus on CustomersAs part of its customer-centric focus, PWP has implemented upgrades and navigation improvements to provide website userswith user-friendly features and options. New features include asection to address the needs of commercial customers, while newpages were created with programs and information specific tocommercial, residential, and multi-family customers. The solarprogram content has also been augmented to include simplifiednavigation that leads customers through the application process.PWP also added a Twitter account and increased the use of bothFacebook and Twitter to promote programs, services, and to pro-vide timely updates on outages.




The Management of Pasadena Water and Power (“PWP”), a department of the City of Pasadena (“City”) and also referred to inthis report as “Utility,” offers the following overview and analysis of the basic financial statements of the Power Enterprise Fund(“Power Fund”) for the fiscal year ended June 30, 2013. We encour-age readers to utilize the information presented here in conjunctionwith the accompanying basic financial statements. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

Overview of the Basic Financial Statements

Management has elected to provide not only highlights to the basicfinancial statements, but also vital statistics and other relevant dataand information associated with the Power Fund. Because the Util-ity is a business-like activity of the City of Pasadena, an enterprisefund is used to account for its power utility operations. Informationon City-wide financial results is available in the City of PasadenaComprehensive Annual Financial Report as of June 30, 2013.

The Power Fund’s basic financial statements are comprised of twocomponents: 1) financial statements, and 2) notes to the financialstatements. Included as part of the financial statements are theStatement of Net Position; Statement of Revenues, Expenses andChanges in Net Position; and Statement of Cash Flows.

The Statement of Net Position presents information on all of thePower Fund’s assets and deferred outflows of resources and liabili-ties and deferred inflows of resources, with the difference reportedas net position. Over time, increases or decreases in net positionmay serve as a useful indicator of whether the financial position ofthe Power Fund is improving or deteriorating.

The Statement of Revenues, Expenses, and Changes in Net Position details the changes in the Power Fund’s net position dur-ing the past fiscal year. Operating results are recorded under the accrual basis of accounting, in which all changes in net position are reported as underlying events occur, regardless of the timing of cash flows. Thus, revenues and expenses are reported in thesestatements for some items that will generate cash flows during future fiscal periods, i.e. accounts payable and accounts receivable.

The Statement of Cash Flows presents the flow of cash and cashequivalents during the last two fiscal years, including certain restricted amounts.

The Notes to Basic Financial Statements provides additional information that is essential to the full understanding of the dataprovided in the basic financial statements.

It should be noted that the recent Statements issued by the Gov-ernment Accounting Standards Board have resulted in changes to

FY 2013 FY 2012 ChangeAssets Current assets $166,730 169,653 (2,923)Non-current assets 144,660 150,137 (5,477)Capital assets 374,292 356,976 17,316 Total assets 685,682 676,766 8,916 Liabilities Current liabilities 24,020 19,376 4,644 Long-term liabilities 128,741 136,209 (7,468)Total liabilities 152,761 155,585 (2,824)Deferred inflows 612 0 612 Net position Invested in capital assets, net ofrelated debt 243,089 216,983 26,106

Restricted: Contribution to General Fund 14,544 14,093 451 Stranded Investment 124,951 130,574 (5,623)Other Purposes 1,119 1,929 (810)Unrestricted 148,606 157,602 (8,996)Total net position $532,309 521,181 11,128

(in thousands)

City of PasadenaPOWER ENTERPRISE FUND

Management’s Discussion and AnalysisJune 30, 2013

the financial statement format and presentation. Specifically, State-ment No. 63–Financial Reporting of Deferred Outflows, Deferred Inflows of Resources, and Net Position is especially evident inchanges to terminology and presentation. The term “net assets” has been changed globally to “net position” and two new categoriesof deferred inflows and deferred outflows appear in balance sheets. Deferred Outflows of Resources reflects a consumption of net as-sets by the City that is applicable to a future reporting period andhas a positive effect on net position, similar to assets. Deferred inflows of Resources represents an acquisition of net assets that isapplicable to a future reporting period and has a negative effect onnet position, similar to liabilities.

Financial Highlights

At the end of fiscal year 2013 (“FY 2013”), the Power Fund’s assetsexceeded its liabilities and deferred inflows by about $532.3 million,an increase of approximately $11.1 million or 2.1% over the priorfiscal year. Of this amount, approximately $148.6 million was classi-fied as unrestricted net position.

In FY 2013, PWP sold Electric Revenue Refunding Bonds, 2012ASeries (“2012A Bonds”) of approximately $11.8 million to refund aportion of the outstanding Electric Revenue Bonds – 2002 Seriesand 2003 Series, fund a deposit to the Parity Reserve Fund, andpay the cost of issuance of the 2012A Bonds.

The total retail electric energy sold was about 1.13 million mega-watt hours, a 1.2% increase compared to the prior fiscal year. Totaloperating revenue for FY 2013 was approximately $190.1 million,an increase of about $4.1 million or approximately 2.2% comparedto the prior year. Total operating expense was about $177.6 million,an increase of approximately $10.2 million or 6.1% compared to theprior year. Investment earnings for the year were about $3.3 million,a decrease of approximately $3.3 million or about 49.5% comparedto FY 2012. A total of about $14.1 million was transferred from thePower Fund to the City’s General Fund.

Financial AnalysisThe Condensed Statement of Net Position for the Power Fund is as follows:


As of June 30, 2013, the Power Fund’s total assets increased byapproximately $8.9 million or about 1.3%, primarily due to approxi-mate increases of nearly $17.3 million in in capital assets – net ofaccumulated depreciation, $1.1 million in advance to other funds,and about $1.0 million in restricted cash and investments. These in-creases were offset by decreases of nearly $2.3 million in accountsreceivable, about $4.7 million in notes receivable from Intermoun-tain Power Authority (“IPA”), approximately $1.4 million in prepaidassets largely due to the Greenhouse Gas emission allowances purchased during the year, $0.5 million in inventory, and $1.6 mil-lion in unrestricted cash and investments. Net Position at the end of the year was about $532.3 million, an increase of approximately$11.1 million or about 2.1% compared to the prior fiscal year.

In FY 2010, PWP defeased some of its outstanding debt service requirements for IPA bonds and received subordinate notes fromIPA. As of June 30, 2013, the Stranded Investment Reserve (“SIR”)balance was about $125.0 million. Of this amount, approximately

FY 2013 FY 2012 ChangeOperating revenues: Retail $167,650 163,213 4,437 Wholesale 6,522 8,963 (2,441)Miscellaneous/ Other Revenues 15,899 13,775 2,124 Total operating revenues 190,071 185,951 4,120

Operating expenses: Purchased power and fuel – Retail 105,865 95,344 10,521 Purchased power and fuel – Wholesale 4,761 4,527 234 Other operating expenses 23,192 23,363 (171)Administrative and general 25,533 26,094 (561)Depreciation 18,295 18,109 186 Total operating expenses 177,646 167,437 10,209

Operating income 12,425 18,514 (6,089)Non-operating income (expense): Investment earnings (incl. net change in fair market of investments) 3,330 6,592 (3,262)

Other income (expense), net 13,681 1,874 11,807 Interest expense (5,556) (5,955) 399 Total non-operating revenues 11,455 2,511 8,944

Income before contributions and transfers 23,880 21,025 2,855 Contributions and transfers: Capital contributions 1,322 1,640 (318)Transfers in from the City General Fund 19 79 (60)Transfers out to the City General Fund (14,093) (15,860) 1,767

Change in net position 11,128 6,884 4,244 Net position, beginning of year 521,181 514,297 6,884 Net position, end of year $532,309 521,181 11,128

The Statement of Revenues, Expenses, and Changes in Net Position forthe Power Fund is as follows:

Non-Operating& Misc. Others

9%ISO-PTO

7%

Commercial& Industrial

54%

Municipal & Others

1%

Wholesale Sales3%

Residential26%

Sources of Funds

$65.3 million was restricted cash and investments available tocover any stranded costs resulting from the uncertainty associatedwith long-term commitments for energy from Intermountain Power Project (“IPP”). The remaining $59.7 million represents the balanceof the IPA subordinate notes, including unamortized premium andcost of issuance. In FY 2013, PWP received approximately $2.5million in interest income from IPA relating to the subordinate notes.

Participating Transmission Owners (“PTO”) revenues and other re-lated transmission revenues received from California IndependentSystem Operator (“CAISO”) to cover PWP’s Transmission RevenueRequirement (“TRR”) were approximately $14.0 million, an increaseof about $0.3 million or 1.8% compared to the prior fiscal year.

The Power Fund’s operating revenue was about $190.1 million, an increase of approximately $4.1 million or 2.2% compared to theprior year. Retail sales increased by about $4.4 million as a result of increases of 1.2% in retail energy sold and about 7.0% in thepower distribution and customer rate. Total retail revenue amountedto about $166.1 million, of which $112.2 million was related to com-mercial and industrial, and $53.9 million to residential. The retailrevenues from commercial and industrial, and residential repre-sented 54% and 26%, respectively, of total sources of the PowerFund in FY 2013. Miscellaneous and Other revenues increased byabout $2.1 million largely due to sales of a portion of the allocatedcap and trade emission allowances during the fiscal year. Revenuefrom wholesale transactions was about $6.5 million, a decrease ofapproximately $2.4 million or 27.2% from the prior year due to decreases in energy purchased and excess energy sold to CAISOas a result of an increase in retail sales, and an increase in the useof local generation to support PWP’s distribution system. Combinedinvestment earnings and change in fair value of investments decreased by about $3.3 million or 49.5% to approximately $3.3million due to lower interest rates and losses on investments. Totalcapital contributions received from developers was approximately$1.3 million, a decrease of about $0.3 million or 19.4%.

In compliance with the City Charter, PWP transferred approximately$14.1 million to the City General Fund during FY 2013, a decreaseof about $1.8 million or 11.1% compared to the prior fiscal year. The transfer rate for FY 2013 was based on 9% of FY 2012 grossoperating revenue from retail rates while the transfer rate for FY2012 was based on 10% of FY 2011 gross operating revenue fromretail rates.

(in thousands)



(continued)



(continued)


PurchasedPower46%

Net Income5%

Interest3%

General FundTransfer

7%Depreciation9%

Administrative& General

12%

Direct Operating11%

Fuel Expense7%

PurcPo46

Net Income5%

9%ativeral

Expense7%

Uses of Funds

Capital Assets and Debt Administration

As of June 30, 2013, the Power Fund’s net utility plant and equip-ment, which includes investments in production, transmission, distribution facilities, and general items such as equipment and furniture, was about $374.3 million, an increase of approximately$17.3 million or 4.9% over the prior year.

Long-Term Debt

Long-term debt was about $134.5 million at the end of FY 2013.This represents a decrease of approximately $8.4 million or 5.9%compared to the prior fiscal year.

At the end of the fiscal year, the Power Fund’s current long-termoutstanding debt due within a year was about $8.7 million and non-current long-term debt was approximately $125.8 million. The debtis backed by the revenue of the Utility. PWP’s Power EnterpriseFund maintained an “AA-” rating from Standard and Poor’s and“AA” from Fitch.

Requests for Information

This financial report is designed to provide a general overview ofthe Power Fund’s finances. Questions concerning information pro-vided in this report should be addressed to the Assistant GeneralManager, Finance, Administration and Customer Service BusinessUnit, Pasadena Water and Power, 150 S. Los Robles Avenue, Suite 200, Pasadena, California 91101.

FY 2013 FY 2012 Land $ 2,909 2,909 Buildings and Improvements 43,549 43,133 Utility Lines, Machinery & Equipment 551,449 541,874 Construction Work in Progress 98,392 73,526 Accumulated Depreciation (322,007) (304,466)Net capital assets $374,292 356,976

FY 2013 FY 2012 1998 Electric Revenue/Refunding Bonds $ 5 5 2002 Electric Revenue Bonds 3,535 9,155 2003 Electric Revenue Bonds – 6,010 2008 Electric Revenue Bonds 52,715 53,975 2009 Electric Revenue/Refunding Bonds 34,740 38,030 2010 Electric Revenue/Refunding Bonds 35,540 35,725 2012 Electric Revenue/Refunding Bonds 7,950 – Total Long-Term Debt 134,485 142,900 Current Long-Term Debt 8,695 8,850 Non-Current Long-Term Debt $125,790 134,050

Outstanding Long-Term Debt

(in thousands)

(in thousands)

Total operating expenses amounted to about $177.6 million, an increase of approximately $10.2 million or 6.1% over the prior year.The increase was mainly due to higher energy costs as a result ofrenewable energy procurement growth to meet PWP’s RenewableElectricity Standard (“RES”), increases in transmission accesscharge (“TAC”) expenses due to an increasing TAC rate, and capand trade emission allowance auction expenses. The total pur-chased power expense was about $96.1 million, which represented46% of total uses of the Power Fund in FY 2013. Fuel usage increased in FY 2013 over the prior year at a higher gas price to support the reliability of the distribution system resulting from theshutdown of two gas turbine generating units. Administrative andGeneral Expense amounted to about $25.5 million, a decrease ofapproximately $0.6 million or 2.2% over the prior year. This includescosts for the Public Benefit program, finance, administration, andcustomer services.

Depreciation expense was about $18.3 million, which was similar to the prior year. Total interest expense was about $5.6 million, adecrease of approximately $0.4 million or 6.7% from the prior yeardue to interest savings resulting from the issuance of the 2012ABonds.

Income before contributions and transfers was approximately $23.9million, an increase of about $2.9 million or 13.6% compared to theprior year. This was the net result of a decrease of approximately$6.1 million in operating income and an increase of about $8.9 million in non-operating revenues. The increase in non-operatingrevenues was largely due to a receipt of a portion of the insuranceclaim settlements received in FY 2013 related to the damage to thegas turbine units, offsetting a decrease in investment earnings. Netposition increased by about $11.1 million or 2.1% to approximately$532.3 million.

Capital Assets


City of PasadenaWATER ENTERPRISE FUND


The Management of Pasadena Water and Power (“PWP”), a department of the City of Pasadena (“City”) and also referred to inthis report as “Utility,” offers the following overview and analysis ofthe basic financial statements of the Water Enterprise Fund (“WaterFund”) for the fiscal year ended June 30, 2013. We encouragereaders to utilize the information presented here in conjunction with the accompanying basic financial statements. Unless other-wise indicated, all amounts are expressed in thousands of dollars.

Overview of the Basic Financial Statements

Management has elected to provide not only highlights to the basicfinancial statements, but also vital statistics and other relevant dataand information associated with the Water Fund. Because the utilityis a business-like activity of the City of Pasadena, an enterprisefund is used to account for its water utility operations. Informationon City-wide financial results is available in the City of PasadenaComprehensive Annual Financial Report as of June 30, 2013.

The Water Fund’s basic financial statements are comprised of twocomponents: 1) financial statements, and 2) notes to the financialstatements. Included as part of the financial statements are theStatement of Net Position; Statement of Revenues, Expenses andChanges in Net Position; and Statement of Cash Flows.

The Statement of Net Position presents information on all of theWater Fund’s assets and deferred outflows of resources and liabili-ties and deferred inflows of resources, with the difference reportedas net position. Over time, increases or decreases in net positionmay serve as a useful indicator of whether the financial position ofthe Water Fund is improving or deteriorating.

The Statement of Revenues, Expenses, and Changes in Net Posi-tion details the changes in the Water Fund’s net position during thepast fiscal year. Operating results are recorded under the accrualbasis of accounting in which all changes in net position are reportedas underlying events occur, regardless of the timing of cash flows.Thus, these statements reflect revenues and expenses that willgenerate cash flows during future fiscal periods, i.e. accounts pay-able and accounts receivable.

The Statement of Cash Flows presents the flow of cash and cash equivalents during the last two fiscal years, including certainrestricted amounts.

The Notes to Basic Financial Statements provides additional information that is essential to the full understanding of the dataprovided in the basic financial statements.

It should be noted that the recent Statements issued by the Gov-ernment Accounting Standards Board have resulted in changes to

the financial statement format and presentation. Specifically, State-ment No. 63–Financial Reporting of Deferred Outflows, Deferred Inflows of Resources, and Net Position is especially evident inchanges to terminology and presentation. The term “net assets” hasbeen changed globally to “net position” and two new categories of deferred inflows and deferred outflows appear in balance sheets. Deferred Outflows of Resources reflects a consumption of net assets by the City that is applicable to a future reporting period and has a positive effect on net position, similar to assets. Deferred Inflows of Resources represents an acquisition of net assets that isapplicable to a future reporting period and has a negative effect onnet position, similar to liabilities.

Financial Highlights

At the end of fiscal year 2013 (“FY 2013”), the Water Fund’s assetsexceeded its liabilities by about $134.3 million, an increase of about$15.9 million or 13.5% over the prior fiscal year. Of this amount, approximately $28.2 million was available to meet the Utility’s near-term obligations and nearly $3.4 million was available for contribu-tion to the City’s General Fund.

Revenues from retail sales exceeded the prior year’s results due toa 7.2% or 884,184 billing unit increase in total water sold. A billingunit is equivalent to 748 gallons of water.

Financial AnalysisThe Condensed Statement of Net Position for the Water Fund is as follows:

Restated FY 2013 FY 2012 Change

Assets Current assets $ 37,743 26,599 11,144 Non-current assets 21,750 29,326 (7,576)Capital assets 162,004 152,242 9,762 Total assets 221,497 208,167 13,330 Liabilities Current liabilities 10,584 9,562 1,021 Long-term liabilities 76,622 80,246 (3,624)Total liabilities 87,206 89,808 (2,603)Net position Invested in capital assets, net of related debt 102,675 97,309 5,366

Restricted: Contribution to General Fund 3,403 3,167 236 Unrestricted 28,213 17,883 10,330 Total net position $134,291 118,359 15,932

The total assets of the Water Fund increased by about $13.3 million primarily due to increases in cash and investments, including restricted assets, of approximately $2.7 million; nearly $9.8 millionin capital assets – net of accumulated depreciation; and about $2.1million in accounts receivable mainly resulting from an increase inbillings to Jet Propulsion Laboratory (“JPL”) for reimbursement ofgroundwater treatment service costs. These increases were offsetby a decrease of about $1.1 million in inventory. Due to an adjust-ment, the inventory balance at fiscal year-end 2012 was restatedfrom $9.9 million to $10.9 million. Total net position at the end of theyear was approximately $134.3 million, an increase of about $15.9million compared to the prior year.

(in thousands)


Compared to the prior year, total investment earnings—includingnet change in fair market value of investments—decreased slightlyby about $0.2 million. Capital contribution in aid of construction received from developers also decreased slightly by approximately$0.1 million. Other non-operating income decreased by nearly $0.6million or 8.6% compared to the prior year. This was the net resultof a decrease of approximately $2.9 million in gain on disposal ofassets due to an easement sale in the last fiscal year on water system land, and an increase of about $2.3 million in other non-operating revenues, including reimbursement from JPL for ground-water treatment services and federal and state programs related to water projects.

Operating expenses increased by about $1.7 million or 4.1% compared to FY 2012. This increase was primarily due to higherpurchased water costs resulting from rate increases implementedby Metropolitan Water District (“MWD”) and an increase in depreci-ation expense. Net operating income increased nearly $2.5 million or 19.5%.

Due to a water inventory adjustment, the purchased water expensefor FY 2012 has been restated from $17.7 million to $16.7 million.Compared to the prior fiscal year, purchased water expense in-creased by about $1.2 million or 7.2% resulting from water rate increases implemented by MWD in January 2012. PWP purchased18,254 acre-feet from MWD in FY 2013, representing about 55.5%of the total water production for the year. The purchased water expense represented 27% of total uses of the Water Fund.

Purchased power costs associated with pumping water increasedslightly by about $0.1 million compared to the prior fiscal year dueto a 16.0% increase in pumped water. An increase in Other operat-ing expenses, which include source of supply, water treatment,pumping maintenance and transmission, and distribution expenses,was offset by a decrease in administrative and general expenses.

In compliance with the City Charter, the transfer out of the WaterFund to the City’s General Fund was about $3.2 million. This contri-bution represents 6% of the total operating revenue received duringthe prior year, excluding sales to other utilities. The total transfer to the City was about $3.7 million, which included transfers for Hahamongna Watershed Park.

The Statement of Revenues, Expenses, and Changes in Net Position forthe Water Fund is as follows:

Restated FY 2013 FY 2012 Change

Operating revenues: Sales within City limits $ 37,692 35,511 2,181Sales outside City limits 7,374 6,872 502 Municipal Sales & Fire Protection 3,257 2,863 394 Capital Improvement Charge 8,393 7,941 452 Miscellaneous/ Other Revenues 1,820 1,114 706 Total operating revenues 58,536 54,301 4,235

Operating expenses: Purchased Water 17,953 16,748 1,205 Purchased Power 2,465 2,368 97 Other operating expenses 10,467 10,406 61 Administrative and general 6,815 6,891 (76)Depreciation 5,370 4,951 419 Total operating expenses 43,070 41,364 1,706

Operating income 15,466 12,937 2,529 Non-operating income (expense): Investment earnings (incl. net change in fair market of investments) 303 476 (173)

Other income (expense), net 6,673 7,300 (627)Interest expense (3,414) (4,306) 892 Total non-operating expenses 3,562 3,470 92

Income before contributions and transfers 19,028 16,407 2,621 Contributions and transfers: Capital contributions 611 677 (66)Transfers out to the City General Fund (3,707) (3,313) (394)

Change in net position 15,932 13,771 2,161 Net position, beginning of year, as restated 118,359 104,588 13,771Net position, end of year $134,291 118,359 15,932

(in thousands)

Operating revenues for FY 2013 increased by approximately $4.2million or 7.8% compared to the prior year. The change was due toa 7.2% increase in retail water sales and an increase of about $0.4million in wholesale water sales/lease to other agencies.

Sales revenue generated inside City limits increased by approxi-mately $2.2 million or 6.1%, while sales revenue generated outsideCity limits increased by about $0.5 million or 7.3% compared to the prior year. The retail revenues generated inside and outside limits represented 57% and 11%, respectively, of total sources ofthe Water Fund in FY 2013. Municipal and fire protection sales revenue also increased by approximately $0.4 million or 13.8%. In addition, Capital Improvement Charge (“CIC”) revenue increasedby nearly $0.5 million or 5.7% compared to FY 2012 due to an increase in retail sales. The CIC is a volumetric charge.

CapitalImprovements

Charge13%

Municipal& Others

8%

Outside City11%

Non-Operating& Misc. Others

11%

Inside City57%

Sources of Funds

City of PasadenaWATER ENTERPRISE FUND


(continued)


Depreciation expense was about $5.4 million, an increase of about$0.4 million or 8.5% over the prior year. Total interest expense wasapproximately $3.4 million, a decrease of nearly $0.9 million or20.7% compared to the prior fiscal year mainly due to a capitaliza-tion of a portion of the interest expense related to the constructionof capital projects.

Purchased Water27%

Direct Operating16%

Interest5%

Administrative & General

10%

Depreciation8%

Net Income24%

General FundTransfer

6%

Purchased Power4%

Uses of Funds

Capital Assets and Debt Administration

As of June 30, 2013, the Water Fund’s net utility plant and equip-ment, which includes investments in production, transmission, facilities-related distribution, and general items such as equipmentand furniture, was approximately $162.0 million, an increase ofabout $9.8 million or 6.4% over the prior year. The increase is primarily attributable to an increase in water mains, machinery, and equipment.

Long-Term Debt

At the end of the fiscal year, the Water Fund’s non-current long-term outstanding debt was approximately $75.6 million, of which

Requests for Information

This financial report is designed to provide a general overview ofthe Water Fund’s finances. Questions concerning information pro-vided in this report should be addressed to the Assistant GeneralManager, Finance, Administration and Customer Service BusinessUnit, Pasadena Water and Power, 150 S. Los Robles Avenue, Suite 200, Pasadena, California 91101.

FY 2013 FY 2012 Land $ 1,411 1,411 Buildings and Improvements 4,421 4,404 Water Mains, Machinery & Equipment 195,055 192,101 Construction Work in Progress 36,596 24,607 Accumulated Depreciation (75,480) (70,281)Net capital assets $162,003 152,242

FY 2013 FY 2012 2003 Water Revenue Bonds $ – 2,480 2007 Water Revenue Bonds 18,935 19,415 2010 Water Revenue Bonds 30,000 30,000 2011 Water Revenue/Refunding Bonds 29,745 29,770 Total Long-Term Debt 78,680 81,665 Current Long-Term Debt 3,070 2,515 Non-Current Long-Term Debt $75,610 79,150

Outstanding Long-Term Debt

(in thousands)

(in thousands)

Capital Assets

about $3.1 million was due within a year. The debt was backed bythe revenue of the Utility. PWP’s Water Enterprise Fund maintainedan “AA” rating from Standard and Poor’s and “AA+” from Fitch.City of Pasadena

WATER ENTERPRISE FUNDManagement’s Discussion and Analysis

June 30, 2013

(continued)


City of PasadenaWATER AND POWER ENTERPRISE FUNDS

Statement of Net PositionJune 30, 2013

AssetsCurrent assets:Cash and investments (note 2) $129,111,241 17,741,948Accounts receivable, net (note 3) 20,393,551 9,802,443Notes receivable – current (note 4) 4,989,583 –Inventories 10,151,361 9,829,404Prepaids and other assets 2,084,602 369,507

Total current assets 166,730,338 37,743,302Noncurrent assets:Restricted assets – cash and investments:

To finance stranded investments (note 9) 65,326,204 –Other restricted cash and investments 6,234,234 20,363,811Notes receivable (note 4) 47,752,501 –

Prepaid long-term assets 24,247,137 1,386,267Advances to other funds (note 6) 1,100,000 –Capital assets (note 5) 696,298,301 237,483,352Less accumulated depreciation (322,006,630) (75,479,933)Net property, plant and equipment 374,291,671 162,003,419Total noncurrent assets 518,951,747 183,753,497

Total assets 685,682,085 221,496,799

LiabilitiesCurrent liabilities:Accounts payable and accrued liabilities 14,413,157 7,348,555Deposits 912,158 164,864 Revenue bonds – current (notes 7 and 8) 8,695,000 3,070,000

Total current liabilities 24,020,315 10,583,419Long-term liabilities:Revenue bonds – long-term (notes 7 and 8) 125,790,000 75,610,000Unamortized premium (discount) 2,951,470 1,012,313

Total long-term liabilities 128,741,470 76,622,313Total liabilities 152,761,785 87,205,732

Deferred inflow of resourcesDeferred inflow of resources (note 10) 611,647 –

Net PositionInvested in capital assets, net of related debt 243,089,435 102,674,917Restricted:Contribution to General Fund 14,543,862 3,402,950Stranded Investment 124,951,046 –Other purposes 1,118,482 –

Unrestricted 148,605,828 28,213,200Total net position $532,308,653 134,291,067

See accompanying notes to the basic financial statements.

Light & Power Water


Operating revenues: Charges for services: Light and power operating revenue $ 53,788,089 –Recovered transmission and energy cost 107,311,468 –Public benefit charge 6,550,582 –Sales to other utilities 6,522,304 –CAISO-PTO* 14,003,035 –Water sales within City limits – 37,691,775Water sales outside City limits – 7,373,900Municipal sales and Fire Protection – 3,257,528Capital improvement charge – 8,392,621Miscellaneous others 1,895,427 1,819,678Total operating revenues 190,070,905 58,535,502

Operating expenses:Fuel – retail 10,807,624 –Fuel – wholesale 3,739,816 –Purchased power – retail 95,057,819 2,465,383Purchased power – wholesale 1,021,235 –Purchased water – 17,952,492Other production costs 8,205,636 –Hydro-electric power generation 38,028 –Sources of supply – 977,398Pumping – 543,053Water treatment – 4,512,372Transmission and distribution 14,948,087 4,434,017Administrative and general expenses 13,099,985 5,451,820Customer and commercial expenses 12,432,991 1,362,894Depreciation 18,294,971 5,370,352Total operating expenses 177,646,192 43,069,781Operating income (loss) 12,424,713 15,465,721

Non-operating revenues (expenses): Investment earnings 3,329,566 303,172Interest expense (5,555,944) (3,414,083)Gain (loss) on disposal of assets (68,427) (38,487)Other non-operating revenues (expenses) 13,749,489 6,712,127Total non-operating revenues (expenses) 11,454,684 3,562,729Income (loss) before transfers and contributions 23,879,397 19,028,450

Capital contributions 1,322,317 610,861Transfers from City of Pasadena (note 11) 18,987 –Transfers to City of Pasadena (note 11) (14,092,965) (3,706,810)

Net income (loss) 11,127,736 15,932,501Net position at beginning of year, as restated (note 16) 521,180,917 118,358,566Net position at end of year $532,308,653 134,291,067

*California Independent System Operator – Participating Transmission Owner.See accompanying notes to the basic financial statements.

Light & Power Water


Statement of Revenues, Expenses, and Changes in Net PositionFor the Fiscal Year Ended June 30, 2013



Statement of Cash FlowsFor the Fiscal Year Ended June 30, 2013

Cash flows from operating activities:Cash received from customers $ 192,550,123 56,448,171Cash payments to suppliers for goods and services (112,182,081) (22,161,354)Cash payments to employees for services (34,144,023) (12,421,557)Cash payments to other funds for services (5,914,004) (1,423,070)Cash payments from other funds for services 187,650 89,870Other non-operating revenues 13,524,276 5,617,039

Net cash provided by (used for) operating activities 54,021,941 26,149,099

Cash flows from non-capital financing activities:Transfers from other funds 18,987 –Transfers to other funds (14,092,965) (3,706,810)Cash received (paid) on loans from other funds (1,100,000) –Intergovernmental revenues 37,563 1,005,218

Net cash provided by (used for) non-capital financing activities (15,136,415) (2,701,592)

Cash flows from capital and related financing activities:Proceeds from long-term debt 11,780,000 –Acquisition and construction of capital assets (35,698,800) (15,166,605)Proceeds from sale of capital assets 19,528 (9,935)Cash received from developers 1,322,317 610,861Principal paid on debt (20,195,000) (2,985,000)Interest paid on debt (4,841,946) (3,507,902)

Net cash used for capital and related financing activities (47,613,901) (21,058,581)

Cash flows from investing activities:Purchase of investments (98,947,550) 492,476Proceeds from sale of investments 76,940,279 –Investment earnings 3,336,670 303,172Payments received from loans made to suppliers 4,745,833 –

Net cash provided by (used for) investing activities (13,924,768) 795,648

Net increase (decrease) in cash and cash equivalents (22,653,143) 3,184,574Cash and cash equivalents at beginning of year 152,075,664 28,858,252

Cash and cash equivalents at end of year $ 129,422,521 32,042,826

Reconciliation of cash and cash equivalents to amountsreported on the Statement of Net Position:Cash and investments $ 129,111,241 17,741,948Stranded investments 65,326,204 –Other restricted cash and investments 6,234,234 20,363,811Less non-cash equivalents (71,249,158) (6,062,933)

Cash and cash equivalents at end of year $ 129,422,521 32,042,826

Light & Power Water



Statement of Cash Flows (continued)For the Fiscal Year Ended June 30, 2013

Reconciliation of operating income (loss) to net cashprovided by (used for) operating activities:Operating income (loss) $12,424,713 15,465,721Adjustments to reconcile operating income (loss) to net cashprovided by (used for) operating activities:

Depreciation 18,294,971 5,370,352Amortization of prepaid long-term assets 2,566,713 –Other non-operating revenues (expenses) 13,711,926 5,706,909(Increase) decrease in accounts receivable 2,268,460 (1,910,911)Increase (decrease) in allowance for uncollectible accounts (21,391) (176,420)(Increase) decrease in inventories 474,977 1,105,712(Increase) decrease in prepaids and other assets (1,188,305) (685)(Increase) decrease in prepaids and long-term assets – 111,802Increase (decrease) in accounts payable and accrued liabilities 5,209,891 485,217Increase (decrease) in due to other governments – (9,556)Increase (decrease) in deferred charges 232,149 –Increase (decrease) in deposits payable 47,837 958

Total Adjustments 41,597,228 10,683,378

Net cash provided by (used for) operating activities $54,021,941 26,149,099

Non-cash investing, capital and financing related activityNon-cash changes in fair value of investments $(2,249,677) (229,639)

See accompanying notes to the basic financial statements.

Light & Power Water


For the Fiscal Year Ended June 30, 2013NOTES TO THE BASIC FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

The following is a summary of significant accounting policies of the City of Pasadena (“City”) as they pertain to the City’s Water and Power Enterprise Funds. The basic financial statements presented represent the respective balances of the funds and the results of operations for the funds and are not meant to represent the entirety of the accruals that are borne by the City that relate to the Pasadena Water and Power Department.

(a) Basis of Accounting

The City’s Water and Power Enterprise Funds are used to account for the construction, operation, and maintenance of the City-owned water and power utilities. Enterprise Funds are presented using the accrual basis of accounting. Revenues are recog-nized when they are earned and expenses are recognized when the related goods or services are delivered. Enterprise Funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Enterprise Fund operating statements present increases (revenues) and decreases (expenses) in total net position.

Operating revenues and expenses generally result from providing services, and producing and delivering goods in connection withan Enterprise Fund’s principal ongoing operations. The principal operating revenues of the Water and Power Funds are charges to customers for sales and services. Operating expenses for the Enterprise Funds include the cost of sales and services, adminis-trative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Amounts paid to acquire capital assets are capitalized as assets in the financial statements. Proceeds of long-term debt arerecorded as a liability in the financial statements. Amounts paid to reduce long-term indebtedness are reported as a reduction ofthe related liability.

When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restrictedresources, and then from unrestricted resources.

Financial reporting is based upon all Governmental Accounting Standards Board (“GASB”) pronouncements, as well as the Finan-cial Accounting Standards Board (“FASB”) Statements and Interpretations, Accounting Principles Boards (“APB”) Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. FASB Pronouncements issued after November 1989 are not followed in the preparation of the accompanyingfinancial statements.

(b) Major Funds

The accompanying financial statements report the following major funds:

Light and Power Fund – Used to account for the operations of the City’s electric utility; a self-supporting activity that renders services on a user-charge basis to residents and businesses as prescribed by the City Charter.

Water Fund – Used to account for the operations of the City’s water utility; a self-supporting activity that renders services on a user-charge basis to residents and businesses as prescribed by the City Charter.

(c) Cash Equivalents

For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Cash equivalents also represent the Enterprise Fund’s share in the City’s cash and investment pool. Cash equivalents have an original maturity date of three months or less from the date of purchase.

(d) Cash and Investments

Investments are reported in the accompanying financial statements at fair value based on quoted market prices, except for certain certificates of deposit, money market investments that mature within one year of acquisition and investment contracts that are reported at cost because they are not transferable, have terms that are not affected by changes in market interest rates, and provided that the fair value of those investments is not significantly affected by the impairment of the credit standing of the issuer or by other factors.

Both realized and unrealized changes in fair value that occur during a fiscal year are recognized and recorded as net changes in fair value of investments. Investment earnings include interest earnings and all other investment income.

(e) Inventories

Inventories held for consumption by the Light and Power and Water Funds are carried at the lower of weighted average cost or market computed on a first-in/ first-out basis. Inventory items are accounted for as an expenditure or expense when consumed.



(f) Advances to Other Funds

Long-term interfund advances are recorded as a receivable and as reserved fund balance by the advancing governmental fund.

(g) Prepaids

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid assets.

(h) Restricted Cash and Investments

The City considers all cash and investments from bond proceeds in Enterprise Funds as restricted. The City is legally mandated under bond indentures to use these resources only for the purposes specified. Also included as restricted cash and investments are amounts accumulated in the Light and Power Fund for the purpose of meeting future contractual commitments including the Stranded Investment Reserve (“SIR”) Utilization Plan which is discussed under Note 9 – Stranded Investments.

(i) Capital Assets

Capital assets greater than $10,000 are capitalized and recorded at cost or at the estimated fair value of the assets at the time of acquisition where complete historical records have not been maintained. Contributed capital assets are valued at their estimated fair market value at the date of the contribution. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Depreciation has been provided using the straight-line method over the estimated useful life of the asset. A summary of the estimated useful lives of capital assets is shown at right:

(j) Bond Premiums/Discounts/Issuance Costs

Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight- line method.

(k) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures. The City has made certain estimates and assumptions relating to the revenues due and expenditures incurred through fiscal year end, collectability of its receivables, the valuation of property held for resale, the useful lives of the capital assets, and the ultimate outcome of claims and judgments. Actual results may differ from those estimates and assumptions.

(l) Future Governmental Accounting Standards Board Statements

GASB Statements Nos. 65-70 listed below will be implemented in future financial statements (note all effective dates reflect that the provisions of these statements are effective for financial statements periods beginning after the date stated):

Light and Power Fund Water Fund

Production Plant 20 to 40 years Source of Supply 20 to 50 yearsTransmission Plant 25 to 40 years Pumping Plant 10 to 50 yearsDistribution Plant 20 to 40 years Treatment Plant 10 to 20 yearsGeneral Plant 10 to 40 years Transmission andEquipment 4 to 10 years Distribution Plant 10 to 80 years

General Plant 6 to 50 yearsEquipment 4 to 10 years

65 Items Previously Reported as Assets and Liabilities

66 Technical Corrections 2012—an amendment of GASB Statements No. 10 and No. 62

67 Financial Reporting for Pension Plans—an amendment of GASB Statement No. 25

68 Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27

69 Government Combinations and Disposals of Government Operations

70 Accounting and Financial Reporting for Nonexchange Financial Guarantees

December 15, 2012

December 15, 2012

June 15, 2013

June 15, 2014

December 15, 2013

June 15, 2013

Effective for Fiscal YearStatement No. Title Beginning on or After

Management is in the process of evaluating the impact of the statements to be implemented for the fiscal year ended June 30,2014 and beyond. For the fiscal year ended June 30, 2014, management does not anticipate any significant impact from the newstatements on the financial statements.



(2) Cash and Investments

Cash and investments as of June 30, 2013 are classified in the accompanying financial statements as follows:

Investments Authorized by the California Government Code and the City’s Investment Policy

The table below identifies the investment types that are authorized for the City by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, ifmore restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Statement of net position: Cash and investments $129,111,241 17,741,948 Restricted cash and investments: To finance stranded investments 65,326,204 –Other restricted cash and investments 6,234,234 20,363,811

Total cash and investments $200,671,679 38,105,759

Cash and investments as of June 30, 2013 consist of the following:

Cash on hand $7,511 500Investment in City of Pasadena Pool 129,103,730 17,741,484Investments 71,560,438 20,363,811

Total cash and investments $200,671,679 38,105,795


Local Agency Bonds+ Yes 5 years None NoneU.S. Treasury Obligations+ Yes 5 years None NoneU.S. Agency Securities+ Yes 5 years None NoneBanker’s Acceptance Yes 180 days 40% 30%Commercial Paper Yes 270 days 15% 10%Negotiable Certificates of Deposit Yes 5 years 25% NoneRepurchase Agreement Yes 1 year None NoneReverse Repurchase Agreements Yes 92 days 20% of base value NoneMedium-Term Notes Yes 5 years 30% 5%Mutual Funds Yes N/A 20% 10%Money Market Mutual Funds Yes N/A 20% 10%Mortgage Pass-Through Securities Yes 5 years 20% NoneCounty Pooled Investment Fund Yes N/A None NoneLocal Agency Investment Fund Yes N/A None NoneJPA Pools (other investment pools) Yes N/A None None

* Based on state law requirements or investment policy requirements, whichever is more restrictive.+With the exception of the Power Reserve and Bond Reserve Funds with consent of the bond insurers, these types of investment can be held for more than five years.

Investment TypesAuthorized by State Law

*MaximumInvestmentin One Issuer

*MaximumMaturity

*MaximumPercentageof Portfolio

Authorizedby Investment

Policy



Investments Authorized by Debt Agreements

Investments of debt proceeds held by bond trustee are governedby provisions of the debt agreements, rather than by the generalprovisions of the California Government Code or the City’s invest-ment policy. The table at right identifies the investment types thatare authorized for investments held by bond trustee. The table alsoidentifies certain provisions of these debt agreements that addressinterest rate risk, credit risk, and concentration of credit risk.

Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk related to changes in market interest rates that will adversely affect the fair value of an investment. Gener-ally, the longer the maturity of an investment, the fair value of the investment is more susceptible to changes in market interest rates.One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter and longer term investments, and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenlyover time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

U.S. Treasury Obligations NoneU.S. Agency Securities NoneBanker’s Acceptance 360 daysCommercial Paper 270 daysMoney Market Mutual Funds N/AInvestment Contracts 20-30 yearsPre-refunded Municipal Bonds NoneRepurchase Agreements 1 yearLocal Agency Investment Fund N/AGeneral Obligation Bonds None

Authorized Investment TypeMaximumMaturity

Corporate Bonds $11,231,274 2,006,256 1,574,101 7,650,917 –Federal Agency Securities 48,230,513 – – 26,003,690 22,226,823Municipal Bond 11,787,371 – 5,371,950 4,517,337 1,898,084Money Market Fund 146,302 146,302 – – –Investment in City Pool 129,103,730 129,103,730 – – –State Investment Pool 164,978 164,978 – – –

Total $200,664,168 131,421,266 6,946,051 38,171,944 24,124,907

Investment Type

Remaining Maturity (in Months)

12 Monthsor Less

13 to 24MonthsTotal

25 to 60Months

More Than60 Months

Light and Power Fund

Investment Type

12 Monthsor Less

13 to 24Months

25 to 60Months

More Than60 Months

Water Fund

Money Market Funds $9,063,870 9,063,870 – – –Investment in City Pool 17,741,484 17,741,484 – – –State Investment Pool 4,612,651 4,612,651 – – –Held by Bond Trustee: Federal Agency Securities 4,774,531 – – 1,825,201 2,949,330 Investment Contracts 1,289,551 – – – 1,289,551 Money Market Funds 623,208 623,208 – – –

Total $38,105,295 32,041,213 – 1,825,201 4,238,881

Total



Disclosures Relating to Credit Risk

Generally, credit risk is the risk related to an issuer of an investment that will not fulfill its obligation to the holder of the investment.This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy or debt agreements, and the actualrating as of year-end for each investment type.

Concentration of Credit Risk

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulatedby the California Government Code. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total Entity investments are as follows:

Corporate Bonds $11,231,274 A – 2,533,132 8,698,142 –Federal Agency Securities 48,230,513 N/A 48,230,513 – – –Municipal Bond 11,787,371 N/A – 6,415,421 5,371,950 –Money Market Funds 146,302 N/A – – – 146,302Investment in City Pool 129,103,730 N/A – – – 129,103,730State Investment Pool 164,978 N/A – – – 164,978

Total $200,664,168 48,230,513 8,948,553 14,070,092 129,415,010

Minimum NotInvestment Type Legal Rating AAA Aa A Rated

Rating as of Year-EndLight and Power Fund

Minimum NotInvestment Type Legal Rating AAA Aa A Rated

Rating as of Year-EndWater Fund

Money Market Funds $9,063,870 N/A – – – 9,063,870Investment in City Pool 17,741,484 N/A – – – 17,741,484State investment Pool 4,612,651 N/A – – – 4,612,651Held by Bond Trustee: Federal Agency Securities 4,774,531 N/A 4,774,531 – – –Investment Contracts 1,289,551 N/A 1,289,551 – – –Money Market Funds 623,208 A 623,208 – – –

Total $38,105,295 6,687,290 – – 31,418,005

Federal Home Loan Bank Federal Agency Securities $18,846,444Federal National Mortgage Association Federal Agency Securities 14,672,949Federal Farm Credit Bank Federal Agency Securities 9,995,000State of California GO Bonds Municipal Bond 5,371,950Federal Home Loan Mortgage Corp. Federal Agency Securities 4,716,120

Investment ReportedIssuer Types Amount

East West Bank Money Market Fund $9,063,870Local Agency Investment Fund State Investment Pool 4,612,651Federal Home Loan Mortgage Corp. Federal Agency Securities 2,949,330Federal National Mortgage Association Federal Agency Securities 1,825,201

Investment ReportedIssuer Types Amount


Water Fund

Total

Total



Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not beable to recover its deposits or recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Govern-ment Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial creditrisk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a finan-cial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities inthe collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicabletrust agreement, acquires the investment, and holds the investment on behalf of the reporting government.

Investment in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (“LAIF”) that is regulated by the California Government Codeunder the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entireLAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accountingrecords maintained by LAIF, which is recorded on an amortized cost basis.

Investment in City of Pasadena Investment Pool

The Water and Power Enterprise Funds are voluntary participants in the City of Pasadena’s investment pool managed by the City ofPasadena. This pool is governed by and under the regulatory oversight of the Investment Policy adopted by the City Council of theCity of Pasadena. The Water and Power Enterprise Funds have not adopted an investment policy separate from that of the City ofPasadena. The fair value of the Water and Power Enterprise Funds’ investment in this pool is reported in the accompanying financialstatements at amounts based upon the Water and Power Enterprise Funds’ pro-rata share of the fair value calculated by the City forthe entire City portfolio. This pool is unrated. Further information about the composition, maturities, and concentrations associated withthis pool can be found in the Comprehensive Annual Financial Report of the City.

(3) Accounts Receivable

As of June 30, 2013, the accounts receivable are categorized as follows:

Accounts receivable $28,143 1,853,541Accrued revenue receivable 10,020,580 4,676,609Interest receivable 761,661 34,385Utility receivable 10,183,593 3,433,530 20,993,977 9,998,065Less: allowance for uncollectible amounts (600,426) (195,622)

Total $20,393,551 9,802,443


(4) Notes Receivable

In January 2009, Light and Power utilized $80.0 million of Reserves for Stranded Investment and in return received Subordinated Notes totaling $70.0 million from Intermountain Power Agency (“IPA”) to defease some of IPA’s outstanding debt service requirement for Intermountain Power Project (“IPP”) bonds. These notes have various maturity dates, and the proceeds, when mature, will be used to stabilize future energy costs. The balance of the notes as of June 30, 2013 is $52,742,084.



(5) Capital Assets

Capital asset activities for the year ended June 30, 2013 are as follows:

Buildings and improvements $43,132,564 665,361 (249,335) 43,548,590 Utility lines, machinery and equipment 541,874,277 10,149,909 (575,577) 551,448,609 Total cost of depreciable assets 585,006,841 10,815,270 (824,912) 594,997,199

Less accumulated depreciation: Buildings and improvements (31,772,262) (913,866) 249,334 (32,436,794)Utility lines, machinery and equipment (272,693,477) (17,381,105) 504,746 (289,569,836)Total accumulated depreciation (304,465,739) (18,294,971) 754,080 (322,006,630)

Net depreciable assets 280,541,102 (7,479,701) (70,832) 272,990,569

Capital assets not depreciated: Land 2,908,820 – – 2,908,820 Construction in progress 73,525,875 35,253,415 (10,387,008) 98,392,282 Total cost of non-depreciable assets 76,434,695 35,253,415 (10,387,008) 101,301,102

Capital assets, net $356,975,797 27,773,714 (10,457,840) 374,291,671

Depreciation expense for the year ended June 30, 2013 was $18,294,971.

Balance at Balance at Light and Power Fund June 30, 2012 Additions Deletions June 30, 2013

Depreciable assets:

Buildings and improvements $4,404,407 16,599 (106) 4,420,900 Water mains, machinery and equipment 192,101,217 3,274,223 (320,175) 195,055,265 Total cost of depreciable assets 196,505,624 3,290,822 (320,281) 199,476,165

Less accumulated depreciation: Buildings and improvements (2,753,063) (137,929) 85 (2,890,907)Water mains, machinery and equipment (67,528,374) (5,232,423) 171,771 (72,589,026)Total accumulated depreciation (70,281,437) (5,370,352) 171,856 (75,479,933)

Net depreciable assets 126,224,187 (2,079,530) (148,425) 123,996,232

Capital assets not depreciated: Land 1,411,424 – – 1,411,424 Construction in progress 24,605,892 15,127,443 (3,137,572) 36,595,763 Total cost of non-depreciable assets 26,017,316 15,127,443 (3,137,572) 38,007,187

Capital assets, net $152,241,503 13,047,913 (3,285,997) 162,003,419

Depreciation expense for the year ended June 30, 2013 was $5,370,352.

Depreciable assets:

Balance at Balance at Water Fund June 30, 2012 Additions Deletions June 30, 2013



(6) Advances to Other Funds

On May 14, 2012, City Council authorized a loan of $1,100,000 from Light and Power Fund of Pasadena Water and Power (“PWP”) to Public Works Department (“Public Works”) of the City and appropriated it to the Fiscal Year 2013 Capital Improvement Program (“CIP”) Budget for the repair and/or replacement of existing street lighting system CIP projects. Public Works agreed to repay the loan to PWP in ten equal annual installments of $110,000 each on January 31 of each year starting on January 31, 2014 and ending on January 31, 2023.

(7) Changes in Long-Term Debt

Changes in long-term debt for the year ended June 30, 2013 are as follows:

Revenue bonds: 1998 Electric Revenue/Refunding Bonds $5,000 – – 5,000 –2002 Electric Revenue Bonds 9,155,000 – (5,620,000) 3,535,000 – 2003 Electric Revenue Bonds 6,010,000 – (6,010,000) – – 2008 Electric Revenue Bonds 53,975,000 – (1,260,000) 52,715,000 1,315,000 2009 Electric Revenue/Refunding Bonds 38,030,000 – (3,290,000) 34,740,000 2,955,000 2010 Electric Revenue/Refunding Bonds 35,725,000 – (185,000) 35,540,000 3,950,000 2010A Electric Revenue/Refunding Bonds – 11,780,000 (3,830,000) 7,950,000 475,000 Total Light and Power Fund long-term liabilities $142,900,000 11,780,000 (20,195,000) 134,485,000 8,695,000

Balance at Balance at Due WithinLight and Power Fund: June 30, 2012 Additions Reductions June 30, 2013 One Year

Revenue bonds: 2003 Water Revenue Bonds $2,480,000 – (2,480,000) – – 2007 Water Revenue Bonds 19,415,000 – (480,000) 18,935,000 500,000 2010A Water Revenue Bonds (Taxable) 25,425,000 – – 25,425,000 –2010B Water Revenue Bonds (Tax-Exempt) 4,575,000 – – 4,575,000 585,0002011A Water Revenue/Refunding Bonds 29,770,000 – (25,000) 29,745,000 1,985,000 Total Water Fund

long-term liabilities $81,665,000 – (2,985,000) 78,680,000 3,070,000

Balance at Balance at Due WithinWater Fund: June 30, 2012 Additions Reductions June 30, 2013 One Year

(8) Revenue Bonds


1998 Electric Revenue/Refunding Bonds

On August 24, 1998, the City issued $70,635,000 of Electric Revenue/Refunding Bonds 1998 Series.Theproceeds of the refunding bonds were used to advance refund the Light and Power Fund’s outstanding RevenueBonds 1990, 1992, 1993, and 1994 Series that were originally issued to finance costs of acquisition andconstruction of certain improvements to the electric system of the City. Interest on the 1998 Bonds is payablesemi-annually on February 1 and August 1 commencing February 1, 1999. The fixed rates of interest vary from 3.464% to 4.075% per annum. A portion of the bonds was advance-refunded by 2009 ElectricRevenue/Refunding Bonds on November 24, 2009. The principal of $5,000 is payable on August 1, 2024. Thisdebt issue is subject to a reserve requirement in conjunction with non-subordinate (parity) debt issued by theCity. The City is in compliance with the revenue rate covenant requiring net income of the electric system to be at least equal to 1.10 times the amount necessary to pay principal and interest on the bonds and all otherparity bonds.

2002 Electric Revenue Bonds

On July 15, 2002, the City issued $82,320,000 of 2002 Electric Revenue Bonds to finance the costs of the 2002Project, which consists of two parts: the Re-powering Project, and the construction and installation of the

Outstanding atJune 30, 2013

$5,000



San Rafael transmission line. Interest is payable semi-annually on December 1 and June 1 commencing June1, 2003.The rate of interest varies from 3.0% to 4.75% per annum. Principal is payable in annual installmentsranging from $3,060,000 to $5,535,000 commencing June 1, 2002 and ending June 1, 2022. A portion of thebonds was advance-refunded by Electric Revenue/Refunding Bonds, 2010A Series, on August 3, 2010. Anotherportion of the bonds was advance-refunded by Electric Revenue/Refunding Bonds, 2012A Series, on October4, 2012. This debt issue is subject to a reserve requirement in conjunction with non-subordinate (parity) debtissued by the City. The City is in compliance with the revenue rate covenant requiring net income of the electricsystem to be at least equal to 1.10 times the amount necessary to pay principal and interest on the bonds andall other parity bonds.

2008 Electric Revenue Bonds

On January 28, 2008, the City issued $58,555,000 of 2008 Electric Revenue Bonds to finance the costs of theacquisition and construction of additions, extensions, and improvements of the City’s Power distribution systemas identified in the Power Master Plan; and the modernization of the existing warehouse facility. Interest ispayable semi-annually on December 1 and June 1 commencing June 1, 2009. The rate of interest varies from4.0% to 5.0% per annum. Principal is payable in annual installments ranging from $1,080,000 to $3,450,000commencing June 1, 2009 and ending June 1, 2037. This debt issue is subject to a reserve requirement inconjunction with non-subordinate (parity) debt issued by the City. The City is in compliance with the revenuerate covenant requiring net income of the electric system to be at least equal to 1.10 times the amount necessaryto pay principal and interest on the bonds and all other parity bonds.


On November 24, 2009, the City issued $40,655,000 of 2009 Electric Revenue/Refunding Bonds to advancerefund a portion of the City’s outstanding 1998 Electric Revenue /Refunding Bonds and pay the costs of issuanceof the 2009 Electric Revenue/Refunding Bonds. The refunding has generated a net present value savings of$3.62 million or 8.33% of the refunded bonds. Interest is payable semi-annually on February 1 and August 1,commencing February 1, 2010. The rate of interest varies from 4.0% to 5.0% per annum. Principal is payablein annual installments ranging from $2,160,000 to $3,510,000 commencing August 1, 2011 and ending August 1, 2024. This debt issue is subject to a reserve requirement in conjunction with non-subordinate (parity) debt issued by the City. The City is in compliance with the revenue rate covenant requiring net income of theelectric system to be at least equal to 1.10 times the amount necessary to pay principal and interest on thebonds and all other parity bonds. This refunding was undertaken to reduce total debt service payments over thenext 15 years by $5,002,513 and has resulted in an economic gain of $3,621,076.


On August 3, 2010, the City issued $36,320,000 of 2010A Series Electric Revenue/Refunding Bonds, to refunda portion of the outstanding 2002 Electric Revenue Bonds and pay the issuance costs of the 2010 ElectricRevenue/Refunding Bonds. The refunding has generated a net present value savings of $3.18 million or 8.9%of the refunded bonds. Interest is payable semi-annually on June 1 and December 1 commencing December1, 2010 at rates varying from 2.0% to 4.0% per annum. Principal is payable in annual installments ranging from $180,000 to $5,000,000 commencing June 1, 2011 and ending June 1, 2021.This debt issue is subject toa reserve requirement in conjunction with non-subordinate (parity) debt issued by the City. The City is incompliance with the revenue rate covenant requiring net income of the electric system to be at least equal to1.10 times the amount necessary to pay principal and interest on the bonds and all other parity bonds. Thisrefunding was undertaken to reduce total debt service payments over the next 11 years by $4.19 million andhas resulted in an economic gain of $3.18 million.

2012A Electric Revenue/Refunding Bonds

On August 6, 2012, the City Council approved the issuance of Electric Revenue Refunding Bonds, 2012A Series,to partially refinance the current outstanding 2002 bonds and fully refund the outstanding 2003 bonds in theamount of up to $15 million. On September 24, 2012, the City sold $11,780,000 Electric Revenue/RefundingBonds, 2012A Series, on a competitive basis. The purpose of the refunding was purely for economic reasons.The City realized a present value savings of $1.1 million or 10.15% present value savings rate. The true interestcost on the financing was 1.54%.

Total Light and Power Fund Revenue Bonds


3,535,000

52,715,000

34,740,000

35,540,000

7,950,000

$134,485,000



2007 Water Revenue Bonds

On April 23, 2007, the City issued $21,550,000 of 2007 Water Revenue Bonds to finance the costs of acquisitionand construction of certain capital improvements to the Water System. Interest is payable semi-annually onDecember 1 and June 1 commencing June 1, 2008. The rate of interest varies from 3.5% to 4.44% per annum.Principal is payable semi-annually on December 1 and June 1, commencing June 1, 2008. The rate of interestvaries from 3.5% to 4.44% per annum. Principal is payable in annual installments ranging from $395,000 to $1,155,000 commencing June 1, 2008 and ending June 1, 2036. This debt issue is subject to a reserverequirement in conjunction with non-subordinate (parity) debt issued by the City. The City is in compliance withthe revenue rate covenant requiring net income of the Water System to be at least equal to 1.10 times theamount necessary to pay principal and interest on the bonds and all other parity bonds.

2010 Water Revenue Bonds

On December 23, 2010, the City issued $30,000,000 of 2010 Water Revenue Bonds consisting of $25,425,000of 2010A Series Taxable Build America Bonds (“2010A Bonds”) and $4,575,000 of 2010B Series Tax-Exempt(“2010B Bonds”). The 2010 Water Revenue Bonds were issued to finance the costs of acquisition andconstruction of certain capital improvements to the Water System, to make an additional deposit to the ParityReserve Fund, and to pay costs of issuance of the bonds. Interest on the 2010A Bonds, which varies from 6.0%to 7.3% per annum, is payable semi-annually on June 1 and December 1, commencing June 1, 2011. Principalis payable in annual installments ranging from $775,000 to $1,910,000 commencing June 1, 2021 and endingJune 1, 2040. Interest on the 2010B Bonds, with rates varying from 3.0% to 5.0% per annum, is payable semi-annually on June 1 and December 1 commencing June 1, 2011. Principal is payable in annual installmentsranging from $585,000 to $740,000 commencing June 1, 2014 and ending June 1, 2020. This debt issue issubject to a reserve requirement in conjunction with non-subordinate (parity) debt issued by the City. The Cityis in compliance with the revenue rate covenant requiring net income of the water system to be at least equal to 1.10 times the amount necessary to pay principal and interest on the bonds and all other parity bonds.

2011 Water Revenue/Refunding Bonds

On December 20, 2011, the City issued $29,770,000 of 2011A Series Water Revenue/Refunding Bonds, torefund a portion of the outstanding 2003 Water Revenue Bonds and pay the issuance costs of the 2011 WaterRevenue/Refunding Bonds. The refunding has generated a net present value savings of $3.5 million or 11.36%savings of the refunded bonds. Interest is payable semi-annually on June 1 and December 1 commencing June 1, 2012 at coupon rates varying from 3.0% to 5.0% per annum. Principal is payable in annual installmentsranging from $25,000 to $2,490,000 commencing June 1, 2013 and ending June 1, 2033. This debt issue issubject to a reserve requirement in conjunction with non-subordinate (parity) debt issued by the City. The Cityis in compliance with the revenue rate covenant requiring net income of the water system to be at least equal to 1.10 times the amount necessary to pay principal and interest on the bonds and all other parity bonds.

Total Water Fund Revenue Bonds


$18,935,000

30,000,000

29,745,000

$78,680,000

Water Fund

(continued on next page)



(9) Stranded Investments

In November 2006, the City Council approved the Stranded Investment Reserve (“SIR”) Utilization Plan (“Plan”). In January 2009, in accordance with the Plan and a previously approved Prepayment Agreement (“Agreement”), PWP utilized approximately $80.0million of the reserve funds to complete an economic defeasance of selected bonds for IPP. As authorized in the Agreement, the IPA issued approximately $70.0 million of subordinated notes to PWP, the payments for which will offset a portion of the debt serviceassociated with the economically defeased bonds, thereby reducing the cost of energy purchased from IPP.

As of June 30, 2013, the Stranded Investment Reserve balance was about $125.0 million. The details of the additions and sub-tractions from the Reserve that occurred during Fiscal Year 2013 are shown below.

Restricted Cash and Investment

Beginning balance $65,514,825Interest earnings 1,107,229 Market gain/losses (1,295,850)Restricted cash and investment ending balance $65,326,204

IPA Subordinated Notes

Notes Receivable Premium/Discount Cost of Issuance Total IPA Subordinated Notes

Restricted for Stranded Investments at June 30, 2013 $124,951,046

(10) Deferred Inflow of Resources

The City implemented GASB Statement No. 63 – Financial Reporting of Deferred Outflows, Deferred Inflows of Resources, and NetPosition in Fiscal Year 2013. As a result, a new category of deferred inflows appears in the Statement of Net Position. Deferred Inflowsof Resources represents an acquisition of net assets that is applicable to a future reporting period and has a negative effect on netposition, similar to liabilities. At June 30, 2013, the Light and Power Fund had a balance of $611,647, and it represents deferredrevenue collected, of which revenue recognition criteria have not been met.

(11) Transfers

The following is a summary of transfers in and out for the year ended June 30, 2013:

(1) Light and Power contributed $14,092,965 to the General Fund for the payment of interest and principal on City bonds, municipal improvements, and other purposes.

(2) The Water Fund transferred $3,706,810 to the General Fund. Of this amount, $3,166,810 is based on 6% of gross income received during the preceding fiscal year as authorized by the City Charter, and the remaining $540,000 supports Hahamongna Watershed Park operations.

(3) The Project Management Fund transferred $18,987 to the Light and Power Fund to cover costs of certain electrical under- grounding projects.

Balance at Balance at June 30, 2012 Reduction June 30, 2013$57,487,917 (4,745,833) 52,742,084 7,415,343 (674,122) 6,741,221 155,691 (14,154) 141,537

$65,058,951 (5,434,109) 59,624,842

Light and Power Fund City of Pasadena $14,092,965 (1)Water Fund City of Pasadena 3,706,810 (2)City of Pasadena Light and Power Fund 18,987 (3)

Transfers From Transfers To Amount



(12) Self-Insurance

The City maintains self-insurance programs for workers’ compensation and general liability. Liability claims are self-administered.Public Safety (Fire and Police) workers’ compensation claims are administered by a third party administrator and the remainder ofCity’s workers’ compensation claims are self-administered. For the period July 1, 2012 to June 30, 2013, excess liability insurance hasbeen purchased with limits of $20 million excess of a $3 million self-insured retention. No excess insurance for workers’ compensationhas been purchased.

The City purchased All Risk Property insurance on all its buildings and a separate policy for production facilities at its power plant, with a total scheduled insured value of $1.3 billion. The basic “all-risk” deductible is $25,000. Exclusions include earthquake, pollutionclean-up, and mold. The City had a major fire claim at its power plant in Fiscal Year 2013 associated with the gas turbine generatingunit GT-2, which had a capitated loss value of $7.8 million. As a result of this fire and a prior power plant fire that affected the GT-1 gasturbine, the power plant production facilities have been excluded from the All Risk/Boiler and Machinery policy, and are insured undera separate property and Boiler and Machinery policy with Lloyds of London syndicates.

The City purchased Boiler and Machinery insurance as part of the All Risk Property Insurance Purchasing Group for limits of$100,000,000. The coverage is subject to certain sub limits, with variable deductibles including $2,500 on consequential damage(except $250,000 at power plants). There have been increases in property values. The City has no claims pending.

Additional information regarding the City’s self-insurance program can be found in the City’s Comprehensive Annual Financial Report.

(13) Pension Plans

Each full-time employee and each part-time employee (with 1,000 hours or more of service) of Pasadena Water and Power is a mem-ber of either the Fire or Police Retirement System (“FPRS”) or California Public Employees’ Retirement System (“CalPERS”). The Cityhas issued pension bonds to fund the unfunded pension obligation of the City. A portion of this debt is attributable to Pasadena Waterand Power employees. Additional information regarding the City’s defined benefit pension plans and related pension obligation bondscan be found in the City’s Comprehensive Annual Financial Report.

(14) Commitments and Contingencies

Jointly Governed Organizations

“Take or Pay” Contracts

The City’s electric operation has entered into various “Take or Pay” contracts to provide for current and future electric generating cap-acity and transmission of energy for City customers. The City is obligated to pay the amortized cost of indebtedness regardless of theability of the contracting agency to provide electricity and/or transmission, as applicable. The original indebtedness will be amortizedby adding the financing costs to purchase energy over the life of the contract.

A summary of the City of Pasadena’s “Take or Pay” contracts (by project) as of June 30, 2013, and its estimated contractualobligations through 2036, based on projected energy prices (in millions) are as follows:

IPAProject

PaloVerde STS

SCPPA Projects

Mead-Adelanto

Mead-Phoenix Magnolia Milford I

PrepaidNatural Gas

Bonds and Notes sold (outstanding) $1,849 58 758 129 39 340 222 318

Interest 378 3 263 26 7 161 112 243Combined total debt service 2,227 61 1,021 155 46 501 334 561

City percentage 5.8% 4.4% 5.9% 8.6% 13.8% 6.4% 2.5% 16.5%City obligations $ 130 3 60 13 6 32 8 93

(in millions)



Intermountain Power Authority

The Intermountain Power Authority (“IPA”), a subdivision of the State of Utah, was formed in January 1974 to finance the constructionof a 1,800-megawatt (“MW”) coal-fueled generating plant consisting of two generating units located near Lynndyl, Utah. The City hastwo separate contracts with the IPA and certain Utah participants, namely the Power Sales Entitlement contract and the Excess Salescontract, which currently provide the City with a 108 MW (6.0%) maximum contractual entitlement in the facility. The City is obligatedfor 79 MW or 4.409% of the generation through the Power Sales contract. The Excess Sales Agreement with IPA, agent for the UtahMunicipal Purchasers and the Cooperative Purchasers, entitles the City to an additional share of 29 megawatts or 1.591%. Approxi-mately 750 gigawatt hours (“GWh”) of energy are delivered to the City from IPP each year.

Southern California Public Power Authority

The City of Pasadena Light and Power Fund joined the Southern California Public Power Authority (“SCPPA”) on November 1, 1980.This authority, consisting of the cities of Los Angeles, Pasadena, Anaheim, Azusa, Banning, Riverside, Colton, Vernon, Burbank, Glendale, Cerritos, San Marcos, and the Imperial Irrigation District, was formed for the purpose of planning, financing, developing, acquiring, and constructing future power and transmission resources. The Joint Powers Agreement has a term of fifty years. The Cityentered into seven projects with SCPPA.

Palo Verde Nuclear Generating Station The first project in which SCPPA participated is a 4,010 MW nuclear fuel generation plant in Arizona (“Palo Verde”). The Palo VerdeNuclear Project consists of three (3) units, each having an electric output of approximately 1,270 MW. Units 1 and 2 began commercialoperation in February and September 1986, respectively; and Unit 3 began commercial operation in January 1988.

Southern Transmission System (STS) SCPPA financed a second project called the Southern Transmission System (“STS”), which transmits power from the IPP to SouthernCalifornia. The 500 kilovolt (“kV”) direct current (“DC”) is rated at 1,920 MW. The City’s share of the line is 5.883% or approximately141 MW. STS commenced commercial operations in July 1986.

Mead-Adelanto Transmission System SCPPA financed a third project called the Mead-Adelanto Transmission System consisting of a 202-mile long 500 kV alternating current (“AC”) transmission line extending between the Adelanto substation in Southern California and the Marketplace substation inNevada. Commercial operations commenced in April 1996. Nine members own one-third of Mead-Adelanto through SCPPA. The Cityis obligated for 75 MW or 8.589% of the SCPPA entitlement.

Mead-Phoenix Transmission System SCPPA financed a fourth project called the Mead-Phoenix Transmission System consisting of a 256-mile long 500 kV AC transmissionline extending between the Westwing substation in Arizona and the Marketplace substation in Nevada. Commercial operations com-menced in April 1996. SCPPA has executed an ownership agreement providing it with member-related ownership shares of 13.866%in the Westwing–Mead project component, 11.364% in the Mead Substation project component, and a 14.458% in the Mead–Market-place project component. The City has entered into a transmission service contract with SCPPA, which obligates the City to pay thecost of its share of the transfer capability of 13.800% or 158 combined MW.

Magnolia Project SCPPA financed a fifth project called the “Magnolia Power Project” consisting of a natural gas-fired generating facility with a nominallyrated net base capacity of 242 MW. The facility is located on an existing generating site in the City of Burbank, California, includingnecessary and appurtenant facilities and equipment thereto, the applicable portion of any common facilities, and interconnection facili-ties. The Project provides the participants firm capacity and energy to help meet their power and energy requirements in 2005 andthereafter. Commercial operations commenced September 2005. SCPPA owns the Magnolia Power Project, and six SCPPA membershave contracted with SCPPA for 100% of its output. The City of Pasadena’s indenture cost share is 6.400% or 14.819 MW of base capacity.

Milford I Wind Project In April 2007, the City approved participation in the Milford Wind Corridor Phase I, LLC Wind Generation Project, a new 200 MW wind-generating facility constructed in Millard County, Utah and a power sales agreement with SCPPA for a 5 MW or 2.5% of 200 MWshare of the project. The project serves the goals established by the City’s Renewable Portfolio Standard for PWP and aids the City inachieving its environmental goals. The project began commercial operation in November 2009.

Natural Gas Development Project On July 1, 2004, nine SCPPA members, including Pasadena, signed a Development Agreement to jointly examine the feasibility andeconomies of purchasing a share in a natural gas reserve field. On July 1, 2005, Pasadena and five out of the eight original interestedparties signed a first agreement with SCPPA, which entitled the City to purchase up to 1,000 million British Thermal Units (“MMBtu”)per day output share of natural gas reserves.



Prepaid Natural Gas Project On October 2007, SCPPA and the City of Pasadena along with the Cities of Anaheim, Burbank, Colton, and Glendale entered intoseparate Prepaid Natural Gas Program Gas Supply Agreements (“Gas Project No.1”). Gas Project No.1 primarily consists of theacquisition by SCPPA of the right to receive an aggregate amount of approximately 135 billion cubic feet of natural gas from J. Aronpursuant to the terms of the Prepaid Natural Gas Sales Agreements. The gas is delivered by J. Aron to SCPPA at designated deliverypoints on the natural gas pipelines that serve each City, in specified daily quantities each month, beginning July 1, 2008, over approx-imately a 30-year term of each of the Prepaid Natural Gas Sales Agreements. Gas sold under the Agreements is priced at the appli-cable Monthly Index Price for the primary delivery point less a specified discount. Each agreement provides for the sale to the Citieson a pay-as-you-go basis. The electric utility systems owned by each City in part provide gas-fired electric utility service to retail con-sumers located in their respective areas. The City of Pasadena’s participation share is 16.5% or an average daily quantity of2,000 MMBtu.

Anschutz-Pinedale Gas Reserves Project On July 1, 2005, SCPPA successfully closed the first transaction to purchase an interest in natural gas reserves under the Natural Gas Development Project to help ensure a stable fuel supply for PWP’s power plants. It will help ensure a stable supply for PWP’spower plants and stabilize the most volatile component of PWP’s operating expenses. SCPPA and other participants, including Los Angeles Department of Water and Power and the Turlock Irrigation District, signed purchase agreements with Anschutz PinedaleCorp. in Denver to buy a portion of the company’s natural gas reserves in Wyoming for $300 million. Other participating cities includeAnaheim, Burbank, Colton, and Glendale. The agreement gives PWP a 2.13% ownership in the acquisition at a total cost of $6.5million including development and transaction costs.

Barnett Gas Reserves Project On October 26, 2006, SCPPA secured a second property interest in a natural gas reserve field under the Gas Development Agree-ment located at the Barnett Shale Formation in Texas. Pasadena’s SCPPA partners in this project include the cities of Anaheim,Burbank, and Colton. The Barnett property, in its early stages of development, initially provided up to 250 MMBtu per day of gas atless than $6 per MMBtu. However, additional capital development (drilling) of the property resulted in greater daily volumes availablefor participants.

Additional financial information on the SCPPA may be obtained by contacting the City of Pasadena Department of Water and Power at 150 South Los Robles, Suite 200, Pasadena, CA 91101.

ChallengesIn response to California Assembly Bill 1890 (“AB1890”), the City chose to open its market to competition on January 1, 2000. The City has long-term contracts with IPA and SCPPA, most of which obligate the City to purchase power and/or services at cost, whichwas projected to be higher than market in a deregulated environment. As a result, the City was faced with a “stranded investment” with a value estimated to be approximately $145.5 million in 2006. AB1890 provided for the recovery of this stranded investmentthrough a “Competition Transition Charge” on each customer’s utility bill. The City stopped collecting this charge after July 1, 2002. competitive financial strategy, which includes a ten-year financial planning model developed in 1996 and updated annually, serves as the blueprint for managing the Utility through the open market transition. The strategy includes recovery and elimination of thestranded investment with minimal impact on customer rates over approximately five years. As of June 30, 2013, the City’s Reserve forStranded Investment fund balance was approximately $125.0 million. The City has implemented the approved Stranded InvestmentUtilization Plan by direct defeasance of the debt service of IPP outstanding bonds and mitigation of variable energy costs.

Other Certain federal and state revenues are received for specific purposes and are subject to audit by the grantor agencies. City manage-ment is of the opinion that adjustments, if any, resulting from such audits will not be significant.

Litigation A number of suits and claims are pending against Pasadena Water and Power arising in the normal course of operations. In theopinion of management, the results of such legal actions will not have a material adverse effect on the financial position or results of operations of Pasadena Water and Power.

(continued on next page)



(15) Pledged Revenue

Pasadena Water and Power has a number of outstanding debt issuances that are collateralized by pledged electric and waterrevenues. The amount and term of the remainder of these outstanding debts are presented in Note 8. The purpose of the debtissuances was for the financing of certain Light and Power and Water projects. For the current year, debt service payments as apercentage of the pledged gross revenue (net of certain expenses) are indicated in the table below. These percentages also approx-imate the relationship of debt service of pledged revenues for the remainder of the term of these debts:

Description ofPledged Revenue

Annual Amount ofPledged Revenue(net of expenses)(in thousands)

Debt Service as a Percentage ofPledged Revenue

Annual Debt Service Payments(in thousands)

Light & Power Revenues $34,049 14,945 44%

Water Revenues 21,140 7,173 34%

(16) Restatement of Beginning Net Position

The accompanying financial statements reflect adjustments that resulted in the restatement of beginning net position of the WaterFund. The adjustment was due to an adjustment in Inventory.

The following schedule summarizes the effect of the prior period adjustment to the beginning net position as of July 1, 2012:

(17) Subsequent Events

2013A Electric Revenue/Refunding Bonds

On November 18, 2013, the City issued $80,485,000 of 2013A Electric Revenue/Refunding Bonds. The purpose of the bonds is torefund the outstanding 2002 Bonds, to finance the costs of acquisition and construction of certain improvements to the Electric Systemof the City, fund a deposit to the parity reserve fund, and pay costs of issuance of the 2013A Bonds. The City realized a present valuesavings of $538,043. The true interest cost on the financing was 4.25%.

Water Fund Lawsuit

The City has been served recently with a lawsuit challenging the Water Fund transfer to the General Fund. The City is currently in theprocess of evaluating the lawsuit and has not yet responded to the complaint.

Net Position at July 1, 2012 $117,364,674

Water Inventory Adjustment 993,892

Net Position at July 1 2012, as restated $118,358,566

Water


Service Area Population 140,020

Service Area Square Miles 23

Number of Distribution Miles 668

Number of Subtransmission Miles 80

Number of Poles 11,313

Number of Receiving Stations 3

Number of Substations 11

Peak Day, in MWh (Sept 2010) 320

Current Year Peak Day, in MWh (Aug 13, 2012) 292

Number of Services 64,931

WaterService Area Population 162,800

Service Area Square Miles 26

Number of Miles of Water Mains 508

Number of Wells 16

Number of Reservoirs 14

Total Reservoir Capacity (gallons) 110,000,000

Number of Treatment Plants 1

Number of Booster Stations 19

Peak Day, in Acre Feet (Sept 2006) 147

Current Year Peak Day, in Acre Feet (Aug 2012) 126

Number of Services 37,934

Power

SUPPLEMEN

TARY

City of PasadenaSUPPLEMENTARY INFORMATION

Water and Power Services



Power Division Ten-Year Operations Summary

Fiscal Year 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

FINANCIAL DATA (in thousands)

Operating Revenue $169,546 163,235 167,565 165,102 174,901 162,589 148,523 130,381 128,724 128,705

Sales to Other Utilities 6,522 8,963 7,199 7,251 10,774 14,114 5,012 5,662 5,500 9,825

PTO–TRR* 14,003 13,753 12,229 11,343 7,298 8,340 10,581 10,621 4,418 –

Other Income** 18,352 10,184 13,948 21,652 14,263 17,639 23,412 11,604 18,101 5,720

Total Revenues 208,423 196,135 200,941 205,348 207,236 202,682 187,528 158,268 156,743 144,250

Fuel – Retail 10,808 7,294 5,587 9,182 17,800 12,958 8,188 8,025 6,745 10,238

Fuel – Wholesale 3,740 4,066 4,166 4,575 1,667 1,307 785 – 1,284 3,583

Purchased Power – Retail 95,058 87,900 89,490 76,655 78,575 90,519 80,000 84,209 68,561 66,834

Purchased Power – Wholesale 1,021 461 755 75 3,332 – – – – 3,388

Other Production 8,243 8,351 7,823 7,033 7,797 6,624 6,533 5,834 5,793 5,594

Transmission and Distribution 14,948 15,161 13,646 13,063 12,505 12,444 9,757 9,857 8,926 7,816

Administrative and General Expenses 13,100 14,228 11,458 11,552 10,947 9,053 8,922 8,477 7,940 8,263

Commercial Expenses 12,433 11,866 10,037 11,901 13,348 7,597 6,432 6,497 6,452 5,694

Depreciation 18,295 18,109 18,184 17,490 16,737 15,708 14,654 14,227 13,858 8,970

Interest Expense 5,556 5,955 6,021 7,205 7,720 6,508 5,914 5,937 6,300 6,523

Transfer to General Fund 14,093 15,861 13,492 16,973 12,922 11,341 5,898 21,167 16,658 11,496

Total Expenses 197,295 189,252 180,659 175,704 183,350 174,059 147,083 164,230 142,517 138,399

Net Income 11,128 6,883 20,282 29,644 23,886 28,623 40,445 (5,962) 14,226 5,851

Total Net Position at end of year 532,309 521,181 514,297 493,809 464,165 440,279 411,545 371,211 377,172 362,946

Long-Term Debt Outstanding $134,485 142,900 150,845 155,510 165,835 173,045 121,695 128,635 135,375 142,950

OPERATING AND USAGE DATA (in MWh)

Energy Generated 168,470 147,749 106,147 123,757 119,556 86,898 57,562 78,796 79,273 142,225

Energy Purchased 1,215,779 1,248,368 1,286,858 1,295,905 1,429,363 1,526,635 1,495,239 1,345,876 1,342,791 1,369,944

Total Energy Delivered 1,384,249 1,396,117 1,393,005 1,419,662 1,548,919 1,613,533 1,552,801 1,424,672 1,422,064 1,512,169

Total Retail Energy Sales (MWh)*** 1,127,252 1,114,111 1,159,581 1,184,344 1,245,009 1,231,414 1,243,943 1,187,621 1,171,029 1,175,908

Total Wholesale Energy Sales 185,361 199,045 169,402 164,215 118,231 315,484 122,496 27,816 125,250 113,919

Total Energy Sales 1,312,613 1,313,156 1,328,983 1,348,559 1,363,240 1,546,898 1,366,439 1,215,437 1,296,279 1,289,827

System Peak (MW) 292 307 320 293 287 313 316 292 278 282

Number of Retail Services 64,926 64,836 63,950 63,843 63,590 62,885 62,799 62,250 61,389 60,795

Average Annual Residential Usage (kWh) 5,926 5,696 5,781 5,947 6,156 6,231 6,221 5,820 5,895 5,829

*Participating Transmission Owner – Transmission Revenue Requirement.**Includes transfer-in from City, Contribution in Aid of Construction (“CIAC”), and interest income.***Includes unbilled MWh.


City of PasadenaSUPPLEMENTARY INFORMATIONPower Division Sales Comparison

SUPPLEMEN

TARY

Revenue from Sales of ElectricityYear Ended June 302013 $ 6,522,304 53,937,015 112,151,395 2,060,640 15,399,551 183,548,601 190,070,905 2012 8,963,006 49,664,661 111,235,031 2,178,923 13,908,981 176,987,596 185,950,602 Increase (Decrease) (2,440,702) 4,272,354 916,364 (118,283) 1,490,570 6,561,005 4,120,303Percent Change -27.2% 8.6% 0.8% -5.4% 10.7% 3.7% 2.2%

Megawatt-Hours SoldYear Ended June 302013 185,361 334,179 776,816 15,683 574 1,127,252 1,312,6132012 199,045 316,084 783,296 15,598 (867) 1,114,111 1,313,156Increase (Decrease) (13,684) 18,095 (6,480) 85 1,441 13,141 (543)Percent Change -6.9% 5.7% -0.8% 0.5% -166.2% 1.2% 0.0%

Average Billing Price per Kilowatt-HourYear Ended June 302013 N/A 0.161 0.144 0.131 N/A 0.163 N/A2012 N/A 0.157 0.142 0.140 N/A 0.159 N/A Increase (Decrease) N/A 0.004 0.002 (0.008) N/A 0.004 N/APercent Change N/A 2.7% 1.7% -5.9% N/A 2.5% N/A

Average Number of Services***Year Ended June 302013 5 56,393 8,533 N/A N/A 64,926 64,9312012 4 56,311 8,525 N/A N/A 64,836 64,840Increase (Decrease) 1 82 8 N/A N/A 90 91Percent Change 25.0% 0.1% 0.1% N/A N/A 0.1% 0.1%

Average Annual Use per Customer (kWh)Year Ended June 302013 N/A 5,926 91,037 N/A N/A 17,362 20,216 2012 N/A 5,613 91,882 N/A N/A 17,184 20,252Increase (Decrease) N/A 313 (846) N/A N/A 179 (37)Percent Change N/A 5.6% -0.9% N/A N/A 1.0% -0.2%

WholesaleEnergy Salesto OtherUtilities*

Commercial& Industrial**

Street Lights &Traffic Signals**

RETAIL ELECTRICITY SALES

Other**** Total Total SalesResidential**

* Includes energy, ancillary, deviation & transmission revenues.** Includes Public Benefits Charge.*** Street Lights and Traffic Signals average number of services are included under the Commercial & Industrial category.**** Includes

a) Net Change in Unbilled Revenue (574 MWh) $ (498,911)b) CAISO-PTO Revenue 14,003,035c) Cap and Trade Revenue 1,888,542d) Service Fees 6,885

Total $15,399,551



Power Data

FY09 FY10 FY11 FY12 FY13

$12.9

$17.0

$12.7

$0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0$15.9

$14.1

FY09 FY10 FY11 FY12 FY13270

280

290

300

310

320

330

293

287

292

320

307Total = $0.1492 Total = $0.1584

0.00580.0057

0.0082

0.0420

0.0875

0.0844

0.0096

0.0430

0.0052

0.0162

0.0000

0.0200

0.0400

0.0600

0.0800

0.1000

0.1200

0.1400

0.1600

0.0000

0.0200

0.0400

0.0600

0.0800

0.1000

0.1200

0.1400

0.1600

Depreciation ExpenseInterest Expense

Fuel & GasOperating & Maintenance

Purchased PowerPublic Benefit ChargeCustomer ChargeDistribution ChargeTransmission ChargeEnergy Charge

Retail Expense Breakdown(per kWh – FY 2013)

Retail Revenue Breakdown (per kWh – FY 2013)

0

50,000

100,000

150,000

200,000

250,000

300,000

13,14413,821

4,758

4,410

67,700

17,743

16,975

25,353

15,611

60,220

90,106

424

66,256

147,967

1,405

59,334

29,296

84,202

22,0217,618

79,009

70,814

Landfill

Geothermal Biomethane

Wind

Hydro


Energy Generated and Purchased(in MWh)

400,000 0 800,000 1,200,000 1,600,000

Purchased Generated

FY10

FY11

FY12

FY13

FY09 119,5561,429,363

123,7571,295,905

106,1471,286,858

147,7491,248,368

1,215,779 168,470

System Peak Demand(in MWh)

Renewable Energy Sources(in MWh)

General Fund Transfer(in millions)



Water Division Ten-Year Operations Summary

SUPPLEMEN

TARY

Fiscal Year 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

FINANCIAL DATA (in thousands)

Operating Revenue $ 58,536 54,301 47,137 43,480 43,095 39,560 39,943 34,508 34,267 31,860

Other Income 7,587 8,453 4,302 4,880 3,837 3,122 3,141 3,061 3,018 2,291

Total Revenues 66,123 62,754 51,439 48,360 46,932 42,682 43,084 37,569 37,285 34,151

Purchased Water 17,953 16,748 14,862 13,646 12,997 14,001 12,155 9,600 11,369 10,570

Sources of Supply 977 1,009 966 486 710 549 576 774 732 523

Pumping 3,009 2,996 2,917 2,695 3,044 2,821 3,181 2,753 2,609 2,891

Water Treatment 4,512 3,590 1,504 1,263 1,383 1,256 1,155 1,185 966 845

Transmission and Distribution 4,434 5,179 5,292 4,815 5,421 4,355 4,307 5,149 4,521 4,414

Administrative & General Expenses 5,452 5,159 4,455 4,322 5,055 5,512 4,353 3,872 3,282 3,277

Commercial Expenses 1,363 1,732 1,485 1,440 1,560 1,699 1,715 1,604 2,615 2,588

Depreciation 5,370 4,951 4,801 4,451 3,854 3,253 3,055 2,768 2,545 2,427

Interest Expense 3,414 4,306 3,680 2,752 2,853 2,949 2,248 2,165 2,235 1,976

Transfer to General Fund** 3,707 3,313 3,104 3,066 2,872 2,923 2,599 2,057 1,916 1,845

Total Expenses 50,191 48,983 43,066 38,936 39,749 39,318 35,344 31,927 32,790 31,356

Net Income 15,932 13,771 8,373 9,424 7,183 3,364 7,740 5,642 4,495 2,795

Total Net Assets 134,291 118,359 104,588 96,215 85,480 78,297 74,933 67,193 61,551 57,056

Long-Term Debt Outstanding $ 78,680 81,665 84,845 57,145 59,340 61,435 63,430 43,400 44,850 46,235

OPERATING AND CONSUMPTION DATA (thousands of billing units)

Production

Pumped Water 6,363 5,485 4,778 4,609 5,169 5,085 5,952 5,985 5,978 6,407

Purchased Water 7,951 7,823 8,261 8,590 9,860 11,110 11,025 9,403 9,671 10,587

Total Production 14,314 13,308 13,039 13,199 15,029 16,195 16,977 15,388 15,649 16,994

Water Sold 13,168 12,284 11,969 12,504 14,574 15,390 16,088 14,622 14,705 15,485

Water System Losses 1,146 1,024 1,070 695 455 805 889 766 944 1,509

Number of Services 37,934 37,891 38,067 37,586 37,602 37,783 37,457 37,135 37,359 37,143

System Peak 126 115 115 120 133 142 147 130 134 146

*Amounts restated.**Includes Hahamongna Transfer of $540.

*


City of PasadenaSUPPLEMENTARY INFORMATIONWater Division Sales Comparison

Revenue from Sales of WaterYear Ended June 302013 $44,649,072 8 ,886,836 2 ,163,664 2,835,930 58,535,5022012 42,421,787 8 ,014,989 1 ,743,885 2,120,383 54,301,044Increase (Decrease) $2,227,285 871,847 419,779 715,547 4,234,458Percent Change 5.3% 10.9% 24.1% 33.7% 7.8%

Billing Units SoldYear Ended June 302013 10,861,144 1 ,778,833 528,067 1,827 13,169,871 2012 10,168,302 1 ,682,042 431,571 1,945 12,283,860Increase (Decrease) 692,842 96,791 96,496 (118) 886,011Percent Change 6.8% 5.8% 22.4% -6.1% 7.2%

Average Price per Billing UnitYear Ended June 302013 $4.111 4.996 4.097 _ 4.445 2012 4.172 4.765 4.041 _ 4.421Increase (Decrease) $(0.061) 0.231 0.056 _ 0.024Percent Change -1.5% 4.8% 1.4% n/a 0.5%

Average Number of ServicesYear Ended June 302013 31,166 6,481 287 _ 37,934 2012 31,186 6,432 273 _ 37,891Increase (Decrease) (20) 49 14 _ 43Percent Change -0.1% 0.8% 5.1% n/a 0.1%

Average Annual Billing Unit per Service**Year Ended June 302013 348 274 1,840 _ 347 2012 326 262 1,581 _ 324Increase (Decrease) 22 12 259 _ 23Percent Change 6.7% 4.6% 16.4% n/a 7.1%

*Includes a) Unbilled Revenue $ 507,281 b) Sales to Other Agencies 1,123,063 c) Miscellaneous Revenues 189,333 d) Fire Protection–Private 1,016,253

Total $2,835,930

**One billing unit equals 100 cubic feet of water, or 748 gallons.

Fire Service andMiscellaneous*CityOutsideInside Total

0

0.5

Total = $4.23 Total = $3.53

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Commodity (incl PWAC)CICCustomer & Distribution

Labor & SuppliesDepreciation and Interest ExpensePurchased Fuel PowerPurchased Water

2.20

0.64

1.39

1.31

0.67

0.19

1.36



Water Data

SUPPLEMEN

TARY

Produced Purchased

FY10

FY11

FY12

FY13

FY09 22,63511,867

19,72110,581

18,96510,968

17,96012,591

14,607 18,254

0 10,000 20,000 30,000 40,000

Water Production and Purchases(in acre feet)

Retail Revenue Breakdown

(per billing unit – FY 2013)

Retail Expense Breakdown (per billing unit – FY 2013)


50

100

1501 33

120 115 115126

System Peak Demand(in acre feet)

FY09 FY10 FY11 FY12 FY13$0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$2.9

$3.1 $3.1$3.3

$3.7

General Fund Transfer(includes Hahamongna)

(in millions)



Pledged-Revenue Coverage

Water Revenue Bonds

Light & Power Revenue Bonds

2004 32,487 24,659 7,828 2,430 1,976 177.67%

2005 35,008 25,502 9,506 1,385 2,235 262.60%

2006 34,971 24,396 10,575 1,450 2,165 292.53%

2007 40,571 27,442 13,129 1,520 2,176 355.22%

2008 40,874 30,192 10,682 1,995 2,949 216.06%

2009 43,552 30,170 13,382 2,095 2,881 268.93%

2010 43,788 28,667 15,121 2,195 2,780 303.94%

2011 47,353 31,480 15,873 2,300 3,518 272.83%

2012* 54,777 36,413 18,364 2,390 4,340 272.87%

2013 58,839 37,699 21,140 2,985 4,188 294.72%

Fiscal YearEndedJune 30

WaterRevenue1

LessOperatingExpenses2

Net AvailableRevenue

Debt Service3

CoveragePrincipal Interest

1Total operating revenues including investment earnings.2Total operating expenses exclusive of depreciation.3Requirements are reported on a cash basis, excluding premiums.

Note: Details regarding the City’s outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include interest or depreciation expenses.

*Amounts restated.

2004 146,699 111,410 35,289 7,470 6,626 250.35%

2005 147,346 105,701 41,645 7,575 6,472 296.47%

2006 159,104 122,899 36,205 6,740 6,040 283.29%

2007 179,700 120,616 59,084 6,940 5,969 457.70%

2008 198,231 140,503 57,728 7,205 6,454 422.64%

2009 202,612 145,971 56,641 7,210 7,908 374.66%

2010 191,927 134,035 57,892 7,510 7,604 383.04%

2011 193,049 142,962 50,087 5,320 6,261 432.49%

2012 192,542 149,327 43,215 7,945 6,181 305.93%

2013 193,400 159,351 34,049 9,060 5,885 227.83%

Fiscal YearEndedJune 30

Light& Power Revenue1

LessOperatingExpenses2

Net AvailableRevenue

Debt Service3

CoveragePrincipal Interest

Business-Type Activity DebtLast Ten Fiscal Years

(in thousands)

City of Pasadena

Bill Bogaard MayorJacque Robinson Vice MayorVictor M. Gordo Council MemberJohn J. Kennedy Council Member Steve Madison Council MemberGene Masuda Council MemberMargaret McAustin Council MemberTerry Tornek Council MemberMichael J. Beck City Manager

Pasadena Water and Power

Phyllis E. Currie General ManagerEric R. Klinkner Assistant General Manager, Chief Deputy,

Customer RelationsShari M. Thomas Assistant General Manager, Finance

and AdministrationJoe Awad Assistant General Manager, Power DeliveryGurcharan Bawa Assistant General Manager, Power SupplyShan Kwan Assistant General Manager, Water Delivery

Directory

Photo courtesy of the Pasadena Convention and Visitors Bureau.

150 S. Los Robles Avenue, Suite 200 Pasadena, California 91101

www.cityofpasadena.net/WATERANDPOWER

www.facebook.com/PasadenaWaterandPower

twitter.com/PWPnews

printed on recycled paper

Date post:	19-Aug-2018
Category:	Documents
Upload:	nguyennhan
View:	214 times
Download:	0 times

SHAPING PASADENA’S FUTURE · target for calendar year 20 12 by achieving a Renewable ... by the...

Documents