The City Council approved a new water rate that is about half of the proposed 17 percent increase, but most households will pay even more after a second increase in December.
The council voted 6-2 to impose a 9 percent rate increase that will go into effect Friday.
That will be followed, however, by a larger increase Dec. 1 that will coincide with Raleigh's transition to tiered-water rates.
The exact amount of the second rate increase will vary depending on how much water a customer uses. Under tiered rates, the rates will rise according to consumption and are designed to encourage conservation.
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For the average Raleigh household consuming 4,488 gallons a month, the Dec. 1 increase will amount to 14 percent. The combined 23 percent increase will amount to about $7.15 a month for the average household.
The City Council's decision was an attempt to protect the financial health of the water system and appease residents who feel they're being punished for doing what city officials asked them to do during the drought: conserve water.
Several council members noted that a one-time 17 percent increase, which City Manager Russell Allen had recommended, would be particularly harsh at this time given the economic problems plaguing the country.
"Right now, with the situation we're in, we have to look at where we are and do this incrementally," Councilman James West said.
Mayor Charles Meeker proposed the staggered rate increase last week, arguing that tiered rates will allow customers to save more through conservation once the second increase goes into effect. Raleigh last increased its water rates by 15 percent on July 1, 2008.
Councilmen Philip Isley and Thomas Crowder were the only two council members who opposed the rate increase. Isley said the switch to tiered rates will introduce even more financial uncertainty into the water system because Raleigh doesn't know how its customers will respond.
"I still think moving to the tiered-rate system right now is a mistake," he said.
Much of Monday's meeting focused on the current and future spending plans of the water system. In addition to the rate increase, the City Council approved a $500 increase in the fees Raleigh charges developers to connect to its water system. That increase is expected to bring in an additional $1.25 million next year.
The city also plans to delay about $500 million in water and sewer projects over the next several years. The utility has taken on considerable debt to pay for improvements and extensions to the water system, with payments to jump from $13.7 million this fiscal year to $28 million next fiscal year.