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O'Fallon water customers could see their monthly bill increase 33 percent by 2016.

The City Council is scheduled to vote July 28 on a proposed water rate increase. The same bill includes a proposed 5 percent sewer rate decrease.

The city conducted a public hearing on the rate hike Thursday afternoon. The council gave the bill its first reading that night.

O'Fallon spokesman Tom Drabelle said the rate increase is necessary to offset rising operational costs for the city-operated water system, which delivers more than 6 million gallons per day to 16,000 customers. The sewer system treats more than 11 million gallons of wastewater daily.

"No one likes to raise rates, but it's something that has to be done," Drabelle said.

Drabelle said many of the chemicals used in the water system are petroleum based. As the price of oil increases, so does the price of the chemicals. Rising electric energy rates and more stringent federal regulations also contribute to increasing water operation costs.

The revenue generated by the water rate increase would pay for several projects, Drabelle said, including building a new well. The system's current wells are operating at capacity, he said. The city also would rebuild one of the current wells and rehab a water tower.

The monthly water rate would increase an average $1.19 per year through 2016, Drabelle said. The increases would apply to residential customers with a meter size of 1 inch or less. Larger meter sizes are typically used by commercial customers, Drabelle said.

The current monthly usage rate for customers living inside the O'Fallon city limits is $2.65 per 1,000 gallons, with a monthly minimum of $7.81. Water customers outside the city limits pay $5.73 per 1,000 gallons, with a minimum fee of $14.32.

For customers inside the city, the monthly minimum would increase to $8.59 in 2012, $9.02 in 2013, $9.47 in 2014, $9.95 in 2015 and $10.44 in 2016.

The monthly usage rate would increase to $2.92 in 2012, $3.06 in 2013, $3.21 in 2014, $3.37 in 2015 and $3.54 in 2016.

For customers outside the city, the minimum fee would increase to $15.76 in 2012, $16.55 in 2013, $17.38 in 2014, $18.25 in 2015 and $19.17 in 2016.

The usage rate would increase to $6.31 in 2012, $6.63 in 2013, $6.97 in 2014, $7.32 in 2015 and $7.69 in 2016.

The monthly sewer rate for customers inside the city is currently $2.67 per 1,000 gallons, with a $19.10 minimum. The rate for customers outside the city is $3.82 with a $25.60 minimum.

O'Fallon plans to decrease the sewer rate in 2012 to $2.54 per 1,000 gallons with a minimum fee of $18.15 for customers inside the city, and $3.63 per 1,000 gallons with a $24.32 minimum for customers outside the city.

The lower sewer rates would continue through 2016, at which time the city would again evaluate its rate structure, Drabelle said.

Customers pay the sewer and water rates as one combined bill. The city's rate proposal separates them because they are different funds in the city budget, Drabelle said.